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Germany "Raises" €55.5 Billion, or 1% Of Its Debt/GDP Ratio, Thanks To Derivative "Accounting Error"
As usual, the most surreal news of the day, perhaps week, is saved for Friday night, when we learn that Germany has magically raised over a quarter of its total EFSF obligation of €211 billion by way of what is essentially magic. The Telegraph reports that "Germany is €55bn richer than it previously thought because of an accounting error at state-owned bank Hypo Real Estate Holding. The mistake at "bad bank" FMS Wertmanagement, happened because collateral for derivatives wasn't netted between the asset and liability side, an FMS spokesman said. As a result, FMS will only contribute about €161bn to Germany's debt this year, down from €216.5bn in 2010." Another way of representing the error is that it is equal to a ridiculous 1% of the country's debt to GDP ratio. "Germany's 2010 debt-to-GDP ratio also drops, to 83.2% from the previous 84.2%, a finance ministry spokesman said." In other words, the modern world, best characterized by the imploding fiat ponzi, has discovered a way to raise capital (electronic, naturally) courtesy of CDS bookmarking errors. And now, we have seen it all.
Since money is fungible, especially at the sovereign level, the "unlocked" capital which fortuitously was in a favorable netting direction (and we can't wait to get our hands on the detailed explanation of just what the error was that resulted in €31 in 2011 and €24.5 billion in 2010 of additional "debt" issuance going to fund FMSW, also known as Germany's bad bank, and now effectively being unwound) can and will used to plug bad Greek debt shortfalls at any other wards of the state which has material exposure to bad debt. Such as partially nationalized Commerzbank, which as we noted yesterday by way of German FAZ, is dumping all of its PIIGS (and potentially US) bond exposure into a bidless market with the same urgency as US banks offloading subrpime paper in the summer of 2007, in order to preserve liquidity and raise capital. Most importantly, this is also money that amounts to over 25% of the German obligation toward the EFSF of €211. So while one can dream up ridiculous stories of €55 billion accounting errors, the reality is that the source does not really matter: after all these are merely electronic ones and zeros. And the next time Germany needs to "raise some electronic cash" to fund even greater PIIGS related shortfall, it will simply find even greater "accounting errors" which magically give justification to shift a liability to an asset, and thus validate what is effectively non-sterilized printing of euros at the national level! Is this merely an appetizer of things to come, and an explanation of how Europe will "fund" the hundreds of billions in capital shortfall once the PIIGS start falling left and right like dominoes, tipped over by what is now the Greek default of October 27, 2011? Of course not: certainly this is nothing more than an innocent accident (for €55 billion) and anyone claiming otherwise is a conspiratorial anarchist.
More from the Telegraph on this stunning development:
The ministry spokesman didn't directly comment on the accounting error, but said "the German government welcomes the substantial progress FMS Wertmanagement has made in reducing the portfolio it took over from Hypo Real Estate a year ago".
"In addition, it is positive that total assets, which include derivatives and hedging transactions, could be reduced by more than €30bn, or almost 10pc, compared with the 2010 results," the ministry spokesman added.
The discovery was made earlier this month but only announced on Friday.
HRE faced a severe liquidity shortage in the wake of Lehman Brothers' bankruptcy in 2008.
The German government provided the bank with capital
injections of 10bn euros and liquidity guarantees amounting to 145
billion euros before nationalising it.
And the truly good news is that with roughly one quadrillion in derivatives floating out there, the bulk of which nobody has any clue what they are, where they are, and what they are collateralized by, it means that the world is free to find derivative-based "errors" which can magically fund well over two times the global debt which at last check was about $500 trillion. At the end of the day, no one is the wiser: after all this is merely the creation and destruction of electronic ones and zeros in the span of nanoseconds in one computer's random access memory.
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I just don't agree with the premise of this article. In other words for all money created there must be "anti-money" created as well. I like to think of it as "the starship Enterprise" and your "matter/anti-matter" converter. Normally you're just petering around out in space "plotting star charts." Every now and then you come across...an "anomaly." Sometimes "all hell breaks loose." In Europe: "it's far past time to jettison the core" and "we have breaches on decks 1-100" and "we're about to contaminate this entire area of space...and our pants as well." I wouldn't be surprised if at JPMorgan's HQ they had a full scale mock-up complete with uniforms and communicators and a special "gold transporter device."
I'm not that sure, that stuff in the global monetary system "adds up" anymore at all. Sure, in theory, there should be a balance between "money" and "anti-money"..... because of what money is (it alone by itself actually represents nothing). That it in theory should work that way, however does not necessarily mean that it is used according to those rules. Pretty sure that "default" is an understatement of what would be needed to fix the global mess that now exists.
actually no...it's quite easy. You just "zero it out." As in "it's worthless." "BUT" you exclaim "SO AND SO AND SUCH AND SUCH!" True indeed. What did they call it in "Mission Impossible"? A "NOC" list? And they had to "steal" that "list of names." It was not easy.
Problem is that for some cases - i.e. national debt and loans - you need to "zero out", ONLY the debt side, but not the loan side (or some other way make the "default" not a loss for the lender). Reason is that if you don't do that, you basically just move debt from one area to another (if it isn't done this way (i.e. "only" a default), the lender then needs to take debt, to compensate the default).
Granted, here we're talking about banks, and they should just go bancrupt.... but when it comes to nations and so on, you cannot just firesale the entire nation.... if you do that - besides of the unfairness - you'll get civil war in no time.
Perhaps when miraculously discovering gold in the crock at the end of the bankers' rainbow it doesn’t hurt to have Josef Ackermann - named the “most powerful banker in Europe” by the New York Times – as head of the largest private bank in the eurozone, Deutsche Bank, and close friend of Jean-Claude Trichet, the recent head of the European Central Bank and ranked one of the five most powerful people in the world by Newsweek.
Does this fall under... Tooth Ferry or Santa Claus? It sure as hell can't be real.
If this was an "Accounting Error", Germany should demand the person in charge of the department that reported the initial numbers to be FIRED!
They accidentally marked to market when they should have marked to model. No worries. They will find lots of errors like this. All very innocent. Germans are used to telling the truth regarding their accounting, they have to get the hang of "best global business practices" and join the likes of Greece and Italy in the new "error" of modern accounting.
Head Like A Hole
http://www.youtube.com/watch?v=2RiEy4es6lU
Will we end up calling it Merkeling, instead of Ponzi? Or a Merkozi skam?
Or, lest I be accused of being the pot who called a kettle black, perhaps a Stanky Bernanke? A Timmy Gimmie? Or a Shapiro Down Lo? Or maybe, simply, a Place Holder Scam?
Hypo Bank should start using Quicken, because I never had a +- €55 billion margin error with that.
tyler has been tring to tell us for a week that a whole room full of finiMinis isn't able to do H.S. math w/ a calculator!
I wondered how they could convince Germans to let them print more Euros.
Now we know.
"hyper real estate" would be a better moniker.
when governments bailed out the banks....government beacame the banks...and have readily addopted the accounting standards of the scum lying bastards... so when governments tell you 100,000 euros of your deposit account are guaranteed safe.. well you know where you stand!!!
German's maybe a lot of things (I happen to be of German descent), but unorganized and error prone are not their defining characteristics. They are cold, calculated and deathly accurate. To have us believe that they made a 55 Billion Euro error in their favor is pure fantasy. How convenient!
THIS JUST IN: Helicopter Ben finds an uncashed check payable to the US for a mere $15 Trillion Dollars sitting on top of his Cadillac dashboard.
0% Debt/GDP, that was easy!
i'm from New York...and these "errors" happen all the time.
Enshuldigung, bitte
Deutsche Accounting Systems ( DAS) to the rescue
Are they taking the Greek cue to bugger the rest!!!
Fur Die Welt- Achtung Bitte
A Merky ( Murky) Solution
"Part Deux."
On second thoughts - a computer error
The financial system is very healthy
The credits show up on the screen. The Banker virus has swallowed the debits
I lost 55 billion euros the other day - it just fell out of my pocket without me noticing - that money they found is probably mine.
If your name is Q-daffy, I'd believe you. This is probably Germany's take of the Libyan (Q-daffy) sovereign fund that the western banks hold in their coffers. This is an elegant way for the Oligarchs to say Thank you to Germany for meeting them 'half way'. Merkel didn't want the 1T EFSF leveraging that Timmy was crying for as a minimum.
So now everybody gets a piece of Libya's stashed pie.
C3X trades portfolio performance continues to be good as 373 pips made in a week of wild swings
http://capital3x.com/think-tank/performance-oct-29-week/
BAM! - and there it is
for the last 3 years I have been predicting this. We will not have a massive economic crash followed by a decade of stagnation, we will have a hundred years of half-arsed-stagnation courtesy of an oligarchy who have rigged the markets and the nature of money such that they will bullshit their way out of their losses, at the expense of a functioning market/society
My hope is that God designed the maths to be bullshit-proof.
I'll paraphrase what someone else (I don't remember who--you're all the same to me) stated in another topic a couple of days ago:
As long as they're just adding digits to balances and bills in a computer system, they can keep this up until the electrical grid fails.
The difference this time around is that we have the machines to hold up an economy. They didn't have electronic money during the great depression.
Most troublesome is that so few identify the premise of monetary authority: physical police (ie military) power. Sovereign spankings. Most here are able to see it, that's good. But it's uncommon.
As monetary authority is tested, the coercive backbone is revealed.
All money is mere promise. All promise is invitation to ire. All ire is fuse to conflict.
I do not see how we avoid conflict, unless the promise-breakers can forestall or preempt conflict through sheer might.
What a deplorable state then!
not ALL elections are. some promises are "taken delivery of." a social security check for example. and of course "Hitler only ran once for public office." Ironic in a way since he was "more popular than ever after he had won."
So HRE is not just bad bank fox toxic papers but also a melting pot for castoff bankers with dyscalculia?
I assume a valuation issue. The bonds were valued mark to market, now with a triple A rating on the EFSF their book value increased.
what bonds? the bonds of the bank? or the country?
https://picasaweb.google.com/lh/photo/ZqPa-0C1ee-OaslZzjbzDg?feat=embedwebsite
Monopoly humour from Banksy (?) at #Occupy London Stock Exchange
http://www.demotix.com/news/894501/unconfirmed-banksy-presents-new-artwo...
Luckily we're all living off of debt of one kind or another, or else the world would be looking more
like the post-29 starvation fest and less like an Internet chat club.
Today, It's only Greece that's starving.They've had an economic stun grenade lobbed into their country,
thrown by those uber-creative German bankers. BTW the nation that's best at stealing from the EU is Germany.
look it up.
If others also try to cheat derivative counterparties,
because it's the only way left to make money,
then bankers are gonna be knifing one another.
Let the bloodfest begin!
Bankers are in London. BTW get rid of your trade deficits.
so you think that London banksters have told Merkozy what to do, or was it their banksters?
I know most of the nasty ones are in London and NY, but they're laughing from the sidelines,
because their German co-conspirators are the boots behind this game of 'kick the can down the road'.
Thanks for your trade deficit advice, but it has as much to do with the flight to quality that
the EU trade union allows. Tell me you don't have or want a German car. What are you producing for export?
If anything, Greeks will start buying local because they won't be able to afford anything foreign.
BTW trade deficits won't matter as we go deeper into this banking crisis. All discussions of healthy economies
are off the table.
Lies , damn lies and statisitcs!
As we're are on the subject, I think we can summarise the whole Euro construct in two statistics :
1° Total banking sector Euro asset base : 50 000 Billion Euros (we have 2 figures touted around : 46T and 55T)
This debt is held in a nebulous of incestuous, private sector, Oligarchy controlled, interconnected, financial spider's web which is part of the wider global financialsed web, of which the Oligarchs and Corporates hold 10-20 T in off-shore accounts).
2° Total Government sector debt : 10 000 Billion Euros. ( Held independently by 17 sovereign states). This excludes entitlements.
----------------------------------------------------------------------------
So if the debt piling on debt accumulation pyramid collapses, and push comes to shove in the financial markets, what are the options?
The statistics tell their own story. The whole political construct of EU was to confederate european nation states thanks to their shared market and thanks to the Bazooka Euro construct of common currency; with the SOLE view of AVOIDING WARS; legacy of past. So the Euro construct is a consensually conceived common insurance policy against going back to selfish, tribal, nation state scenarios of Europe's bloody history.
The question now is : Is this insurance policy AFFORDABlE? Concomittant with a Welfare state expenditure in all of these countries.
This financial bubble is now sending back alarming signals that the policy is too high a price to pay for this insurance, given the dire straits of the economies of southern europe.
If the system collapses then the figures speak for themselves :
Europe will first let EACH nation state collapse to avoid contagion rather than seeing the whole banking sector collapse as a consequence of being joint and several.
Why?
The math speaks for itself. If the nation states go bankrupt the Oligarchy run system loses LESS than if the banking system goes bankrupt. (A write down of 50% of sovereign debt in Europe would be 5T Euros. A writedown of 50% of banking sector's convoluted debt would be 25 T Euros).
Problem solved. No argument possible. Let the nations burn one by one to avoid contagion BUT NOT the banks.
I think the future of Euro zone is all traced out right there, if the math says kicking the can for five, ten, twenty years only makes it worse. Which it does.
In this continental "Sophie's Choice" of choosing sides in the fight between People's interests VS Oligarchical interests, the governments, part of Oligarchy nebula, will not hesitate. Poor sheeple of nation states.
I'm even more sure, given the performance of the US administration since 2000, year in year out, that this oligarchy biased reasoning applies to the US economy to "pi-squared".
either way, we're obviously going through the slow death, like the '30s, for the same reason as the '30s.
Except this time the bankers are the government and vice versa.
I don't see anybody stopping the bankers. The only hope is if the bankers start fighting amongst themselves, like in
2008, because they're too big to Save, now.
For the rest of us, it's now taking on the appearance of a civil disobedience campaign and a disorderly withdrawl from the
fiat system. No cash, no job, no problem.
HEALTH & SAFETY NOTICE
when in a FIRE , go for the EXIT.
No.
It's not the same reason as in the 30's.
In the thirties you could walk into your backyard in Texas with a shovel and find oil. In the 30s oil powered tractors were putting the farm workforce on the sidewalk.
Now, the oil is scarce and it's not ever going to be less scarce. The engines of civilization start to sputter.
There is no fix for this.
Bullshit!
This is one of the Oligarchy's Big Lies. Oil is not scarce. Every time I need fuel, I have no problem finding it at a reasonable price, and that price contains a very large tax component.
Europeans pay an even (much) larger component of their energy expense in taxes. It's an easy method to collect taxes and just about everyone needs/wants energy.
The only thing holding up the value of fiat is the 99%grubbing for it. Snafus like the 55 billion magical discovery bring that fact into focus. Talk about 'moral hazzard'.
What I want to know is why the dumb fuck wizzard banksters didnt just find 55 trillion, then they could just buy the whole world and declare a permanent Oktober fest.
cuz "you gotta pay for that."
http://www.youtube.com/watch?v=dAypaylsWsA&feature=youtube_gdata
Fire..fire..FIRE!
This sounds like a remake of the movie "The Flim-Flam Man".
Yeah, this won't end badly......
Euro Fix didn't fix anything says London Telegraph....http://heavenbounf.blogspot.com/2011/10/eurozone-bail-out-holes-emerge-in-grand.html
But... the derivatives aren't backed by any collateral, these mortgages are unsecured.... they are going to make a mess of things.
I wonder if they'll be able to pull the same shit when Italy comes calling...
It's a shame they didn't find another half-billion, then they could have cleaned up the Solyndra issue in the U.S.
Maybe they can "find" me a ham sandwich and a beer - I'm getting a little hungry.
speaking of fuked-up accounting, this is from:
Gold Seeker Weekly Wrap-Up: Gold and Silver Gain About 7% and 13% on the Week
at casinosRUs, we're bullish on pure bullshit!
The last time the U.S had an 'accounting error' it was in the sum of 2.3 trillion negative. We are lucky the terrorists blew up the accounting error though:
http://www.youtube.com/watch?v=xU4GdHLUHwU
If at first you don't succeed, redefine success!
They found this extra money, and not a moment too soon. The Illuminati work in mysterious ways. Thankyou for helping Germany find all this hidden cash. Now you can continue with your plan.
$500 trillion in global debt and all the gold mined in human history is 5.3 billion ounces - or worth about $9.24 trillion. The amount available as gold bullion is probably much less than 3 billion ounces or worth about $5 trillion as an upper limit. Silver bullion available today is only about 2 billion ounces or worth about $700 billion.
The value of precious metals, which have traditionally been money, is about 1% of the debt in this world. This can only mean that gold prices will continue to rise barring minor temporary disruptions and manipulations. More so for silver.
http://confoundedinterest.wordpress.com/2011/10/29/restoration-and-the-f...
What difference does it make? ALL Euroland countries have debt to GDP of over 250% and will NOT make serious spending cuts.
This is all political delay to get re-elected. NO ECONOMIC CONTENT!
Look at the Euro Sov rates and CDS in the pictures.
"And now, we have seen it all."
Um, no we have not. Not by a longshot.
I just found a 5.55 million ledger error in my checking account. I wonder why my bank didn't notice?????
so all along the discussions have been about a unit of
political power and influence. when fiat monetary systems
parted ways with being certificates with redemptive value
the qualitative aspect of the "money" became, political influence, the primary
instrument of fascism. that is what its all about.
it has nothing to do with "markets', "economy", "accounting" etc..
all that is just diversion. it is about units of political
worthlessness, tendered ignorance and delusion. the true value
of all fiat money and associated derivatives, securities etc..
is zero, as it is at its root qualitatively just political
speculation, we will see? here is how populations fall in love
with political power and those with charisma. it happens
when the forces of ignorance and greed destroy what should be
a simple utility, the currency. to be found one/something first must be lost
i suppose?
?
http://www.youtube.com/user/peacsees#p/u/4/KNTu7wOUdqU
freedom town
This news makes me wonder what the changes in bank account confidentiality will mean. It is well within reach of possibility that we will see a "No Depositor Left Behind" policy.
http://georgesblogforum.wordpress.com/2011/10/28/legal-reality-newsletter-29-october-a-d-2011/
if it's Germany it needs some music, Merkel and some dancing Nazis.
for my money, that's entertainment... http://www.youtube.com/watch?v=MSB21EZQNkA
notice at the end Angela's glide away from the co-conspirators, almost as deft as Tinkerbell
that is, if Tinkerbell wore blue velvet pantsuits!
Wanna know where the power is in the U.S. speech market place? Just observe which racial groups can be freely and severely mocked, libeled and criticized with cowardly impunity. Hint: Germans are on the open target list; Jews are not.
Night on Earth - Rome - Roberto Benigni part 2
http://www.youtube.com/watch?v=0aAVplupgE0&feature=related
.
Bank of America's Death Rattle
http://www.youtube.com/watch?v=3NYTtfQVw1c
Holy crap, a bank full of skittles...
I should teach this accounting trick to my wife to improve family budget.