Goldman: Germany Is Now On The Hook By €1 Trillion (Or 40% Of GDP)
Earmuffs time for our German readers.
Goldman Sachs, in estimating the impact of tomorrow's LTRO, lets one slip, namely the fact that despite popular German expectations that European bailouts occur at the ECB level, and Germany is fairly isolated from what happens in Greece (which as of today no longer stays at the ECB, but shifts right through to the Bundesbank) thereby reducing the risk of runaway debt inflation, the true price to Germany is substantial to quite substantial. €1 trillion to be precise. Which just happens to be 40% of German GDP...
To wit:
The ECB’s second 3-year refinancing operation (LTRO) kicks-off today, with results announced tomorrow at 10:15 GMT. Around EUR200bn is expected to be drawn from (mostly small-medium) banks in the seven countries that have requested loans to be pledged as collateral through the respective national central banks (the number is obtained by applying a 2/3 haircut to a pool of EUR600-700 bn eligible credit claims). The consensus figure for the entire operation is around EUR500bn, similar to the size of the first refinancing. A higher headline number would have positive first order implications for broader markets, indicating that ‘excess liquidity’ is available to Euro area depository institutions. The focus will then shift on where such liquidity will eventually be deployed. Data for January released yesterday showed that credit to the Euro area private sector has stabilized, but not recovered after the sharp decline at the end of last year.
Staying in the Euro area, the vexed issue of the size of the so-called ‘firewalls’ remains unresolved, and will likely come up again at the Euro leaders summit on Thursday and Friday (March 01-02). The debate crystallizes the tension between ‘financial stability’ and ‘moral hazard’ that has characterized the European sovereign and banking crisis right from the start. Calls on Germany and other core states to combine the lending capacity of the EFSF and the ESM and thus provide a bigger protection against tensions in Greece are increasing. But with peripheral spreads in retreat, largely thanks to the ECB’s ‘all-you-can-take’ term funding operations, the fear in some quarters is that of removing incentives for the peripheral sovereigns (and banks) to continue deleveraging. Germany is the country that has pushed the most for PSI in Greece in an attempt to foster future market discipline, but is also the one that has the biggest stake in conditional aid programs to the periphery and seen its ‘target 2 imbalance’ vis-à-vis the EUR periphery reach almost EUR 1trn on the latest count.
So how long before fake German indignation turns real: €1 trillion in sunk PIIGS costs, €2.5 trillion, or 100% of German GDP? €5 trillion?
Or will the perpetually dangled carrot of an insolvent welfare state keep doing to trick to keep the debt slaves in their stupefied trenches in perpetuity, in a state of dazed zombification, punctuated by the occasional showing of Football (either the North Atlantic or European version).
(8 votes)
»
- Login or register to post comments
- 11284 reads
- Printer-friendly version
- Send to friend
Similar Articles You Might Enjoy:
- EU To Issue Statement On Situation In Markets This Afternoon
- Schaeuble Blesses Gaspar: German FinMin Promises To Rescue Portugal
- Merkel Facing German Revolt Over Greek Bailout
- Daily US Opening News And Market Re-Cap: January 23
- Goldman On Banks' Exposure To The Greek Restructuring, Pardon, "Liability Management Exercise"
The underestimation of the year thus far (but it's very early).
"Underestimation" is "priced in."
They have to get the underestimation overestimated, though, to produce the critical 'upside' surprise.
€1 Trillion won't cut it. €3 Trillion in losses is probably 'baked in,' and will be announced with great fanfare, party poppers and ticker-tape.Gott im Himmel !
1 TRILLION DOLLARS (evil laugh) (pinky finger to corner of mouth)
You may be overestimating the underestimation of overestimation, though.
That's quite clearly an understatement
I'm smart enough to know I don't know that answer.
Will vote for any anti EU anti EUR party including Nazis
Ouch. Tme for the Germans to march across Europe again?
World wide revolution is..........."priced in."
Except apparently you can now do whatever you want to people, and they dont mind in the least. Guess it will take complete sudden collapse to make people realize theyve been totaly screwed.
Just think, at one time in this country, all it took was a 1% tax to cause a shooting revolution.
Just as all "less than expected" economic data points have been priced into markets, so too has economic collapse been priced in. Everything is priced in. Global fascism exported to the world via the world wide criminal syndicate known as Wall Street has saved us all.
yes and later the fascists will chuckle... to save humanity, it was necessary to kill off most of them.
The global depopulation agenda is going on full scale--not as originally planned, but with the activation of a Plan B. In this case, a worldwide cancer epidemic by means of Fukushima radiation and increased chemtrails spraying.
Those guys do have some serious power in this planet.
Hedge accordingly.
.
Someone here wrote, "fuck me running" some time ago. I think that about sums all this stuff up as well as possible.
You mean "ze Americans...
The Germans won't be marching anywhere.
They'll be DANCING (YouTube)
US we own the world anyway Americans would; they've been doing that for decades. The rest of the world learned the lesson and knows that war is even more expensive than honest work.
Um, didnt ZH mention something about this...last year?
"in a state of dazed zombification"
Loving the metaphors.
Looks like the Germans will not be getting their tax cuts this year.
That's "priced in."
'Earmuffs time for our German readers.'
Shouldn't that be eyemuffs?
Anygay, German readers are too busy bleeding rectally to read anything much less Goldman's latest.
This time, instead of Jews to the concentration camps, it should be banksters; karma is a bitch.
lol
isn't that the same character ???
And all Eurocrats & PIFGIS!
The Jews are the banksters...don't you know this???
I rather think that Germany's liabilities could be raised to 10 trillion Euro's, and the market would immediately reveal that said number was "priced in."
Such is the completely debauched nature of markets...globally.
1Trillion which is then being funneled back to the banks, I am right with that statement Tyler?
The Germans dont care , just like everyone else , go ahead take whatever you want .
Right its all good, we've got 2 fer 1 Hot Pockets at the store. All is well in the land.
Sheeple everywhere sayeth unto their fractional reserve bankster overlords, "help yourself to whatever you want, but please remember to turn the lights off when you leave."
The time to short bunds is approaching ?
After all, those anti-Japan articles didn't work and Gentlemen don't dump gilts...
Germany is Greece. They may or may not admit it. That is why they have to save Greece.
Where isn't Greece?
Sovreigns tried to absorb bank debt. Banks just created more debt in response. Sovreigns must borrow to pay their debt.
Is there anywhere left that is actually solvent?
Iceland?
Yep; Iceland is doing pretty well actually:
http://www.imf.org/external/pubs/ft/survey/so/2011/SurveyartF.htm
The one thing that appeals to me is that the banking sector is now "only" worth 200% GDP. That's about the lowest in the world now i guess lol.
Think i better learn how to speak islandic, then again; education there is pretty good; everybody speaks English.
Wonder how much a piece of land and some sheep will cost me over there... :)
whats a trillion amongst good neighbors, right?
How about raincoat time for Merkel: http://www.bbc.co.uk/news/world-europe-17185942
Beer hall putsch.
Prost !
A triilion a day keeps the default away!
Too much liquidity, he?
It's mighty generous of you Germans to fund the early retirements of the Piigs. And you better not gripe about it because as soon as you do the Piigs will be running photos of Germans wearing swastikas on the front pages of all their papers.Because we all know the sins of the past that we had nothing to do with are never forgotten .So get to work and goose step into line.
a mile of inspectors ....
http://www.youtube.com/watch?v=pZQIxPQMjoE&feature=related
The Greek Eloi should know it won't take long for the next set of Morlocks to appear for harvesting them. And then it's time for some nicely roasted piigs souvlaki…
Opa!
There once was a chappie called Hitler
Who wished that commitments were littler
He won over the poor
Then started world war
And today it all looks even brittler
Bully!
There once was a leader called Merkel
Who was stuck in a European jerk-circle
They jerked & they jerked
'Til they proved it could work
Now they're jerking all over the sheeple
Can you say FACIAL. I'm sorry, that was just wrong.
Err shouldnt that be blindfold if your reading?
"earmuffs" reference is to movie Old School, and character Vince Vaughn telling his child to cover his ears when buddies Will Ferrell and Luke Wilson start swearing
In bull parlance it's called "walking the dog." Germany has been on a leash since day one...the foodie dish is the "we will allow you to bail out your banks"--but nay..."your going to the Vetranarian instead." I say we're at the "I'm the dog and the car is now pulling into the Vet's parking lot and I'm going ape-shit phase" cuz "you phucking humans have done it to me again!"
Ein Batzen Geld! Big bucks, bitchez!
Germany will go under again and Europe will return to the Thirty Years War as nation states disintegrate. Watch carefully USA - your future looks uncannily like Greece. Politicians are stuoid and merely puppets whose strings are in banker hands. We know this system is finished, what comes next could be interesting....
Germany will simply be forced to 'self-sacrifice' for the sake of peripheral empire. The Petrobuck can't go down without major conflict so essentially everybody's interests are pretty much well known by now. China has played the game near perfectly. Even the Russians have caught up and are almost up to speed...
no worries. come 9:30am the /Es should, after a very brief dip, rally to glorious new highs because (as we all know)...everything is bullish and life is too too beautiful.
(I was amazed the market was allowed to dip, however briefly, into ever so slightly negative territory this morning. No doubt somebody lost their job for that error)
perhaps those 160 german tax collectors should stay put
Yeah, but guess who gets to bail out Germany..... sign us up, Ben and Barry.
EU telling Germany "you sure have a purty mouth"!
Uh oh, there's gonna be a lot of Sour Krauts when this gets out.
But of course, This Time is Verschieden.
This will stop at some point. That is when people will care. Still time to get your house in order and prepare. Still some time.
In the meantime, Ag is now over $36 t oz.
Rehypothecated earmuffs can do ANYTHING. It says so right here in the PowerPoint deck from Goldman.
so is everyone happy ?......is anyone happy ?
here in Germany people dont give a damn for now, because we do not feel anything missing in our own pockets, or so the plebs think. Germany only sits in the first class of this euro-titanic, no difference to the rest of europe. looks like Merkel goes all-in, it's victory and business-as-usual or defeat and start-the-ponzi-with-another-fiat-currency all over again. people in charge dont give a damn about the money, they only want to preserve their status and influence. it's a power-struggle thats long lost to the banksters. mafia-bankers and democrat-ideologist formed the perfect global fascist government. that too, nothing new, huh? I'll back to sleep and keep polishing my silver
Ein Svie Drei: Deustchmark, Uber Alles. LOL.
turn turn kick turn,...Bailouts or deflation, printing, or that Central bank disaster
http://youtu.be/sFs78YdBWeY
Keep it Gay,
schttooped under ass make it gay, vots a trillion for our greek restaurant friends.....wash does deutshmarks well.
Fight against banker occupation, get a real army and seceed from the Union. Pretend you are Wyoming, Germany. you can be the little train that could.
Germans are hard working. An old saying applies here:
"The horse that works the hardest gets whipped the most."
Also applies to the Middle Class in the New World.
"the road to hell is paved with good intentions." that was a German who told me that... many years ago.
and carries the heaviest load.
We're all in the hook one way or another by the looks of things. The timing just differs.
Odd that the nation that is considered the most conservative in the EU has the highest average leverage in its banking system, at 21.3x (Germany). They are followed by France (16.8x) and then comes Italy, Spain and Greece, whose banking systems are levered 10.7x, 10x and 9x respectively. These are country wide numbers, so the larger banks, which have the benefit of being TBTF can be much higher than the average, and far higher than small banks. Certainly in Germany DB and Commerzbank are way above their country's other banks. Switzerland, not an EU member, has two large banks levered 30+:1 and they hold combined assets equal to 400% of Swiss GDP. So of course in this upside down world the SFr is considered one of the safest currencies. Apparently selling half the SNB's gold earlier in the last decade is what makes the SFr so rock solid. This is our world.
Great comments. Post more, please.
historically, this is not sooo odd. the economy is more centered on small and medium businesses i.e. less bonds, less publicly traded stocks and more direct lending by the banks to the businesses. coupled with more and smaller banks, this makes a different landscape than in the US or UK, with a differently leveraged and structured portfolio
then some of the italian, greek and french banks were often used/encouraged/forced to soak up their gov's sovereign bonds
Switzerland is again different because of the two giant global banks it "hosts", Credit Suisse and UBS - though they should really think about throwing them out
the selling of the gold was political, let's say they were advised to do so - but what is still there is really not inconsiderable...
Leverage metrics are tricky because you have to make assumptions about asset and collateral quality. Lots of EU countries have not deflated their housing bubbles (ref ZH) and collateral quality is shaky at best. The actual leverage metrics are probably considerably higher.
Funny how this shit always comes full circle. All the gyrating and "circular references" was just smoke and mirrors to dupe the general public - particularly the German public in this case.
The thing with Germany is, the are going to be "last country standing" in Europe. Through austerity and through Deutsche Bank, they very well could bankrupt and privitize Greece (and then Portugal, so on and so forth).
Sprechen Sie deutsch?
Heinrich Heine
The Silesian Weavers (1844)
"Doomed be the fatherland, false name,
Where nothing thrives but disgrace and shame,
Where flowers are crushed before they unfold,
Where the worm is quickened by rot and mold...We weave; we weave.
"The loom is creaking, the shuttle flies;
Nor night nor day do we close our eyes.
Old Germany, your shroud's on our loom,
And in it we weave the threefold doom; ...We weave; we weave!"
....debt slave stupefied in a state of dazed zombification, punctuated by the dailyl reading of ZH...checking out the gold/silver talisman. Is this already the end and we no longert see or feel it ?
it is the end of our freedom that came a long time ago, but we were only zombified/drugged by the consumption lifestyle and didn't give a rats ass about beeing slaves. now with diminishing ressources, the sheep that are too many in the flock will be fed less and eventually brought to slaughter....
the endgame will be a "naturzustand"-event à la Hobbes. you won't miss the show
Well, even if some are trying to return to that mythical "state of nature," others will be collecting into retreats to defend their God-given rights.
http://survivalblog.com/redoubt.html
Colonizing GDP in the New Era of Economics
I love earmuffs! You can say f%$k s&!t c*#k as much as you want! Wish i could post i pic of my 2year old!
The Euroslaves will put up with ANYTHING as long as they get their "free" healthcare.
Yep, it's time to drag out that old DVD of Michael Moore singing the praises of the You're Peein' healthcare system. What an imbecile.
At least the Europeans care about their fellow human beings. America lets millions of children and elderly go without healthcare.
If that (Europeans caring) were true, how do you explain Europeans letting Greece get in the tight spot in which it now finds itself?
If that were true, how do you explain Hitler or Lenin or Stalin or Ceausescu?
If that were true, how do you explain the horrors committed in the former Yugoslavia? Are Yugos not European?
The next time you want to make idiotic blanket statements, you might want to go upstairs and try them out on your mummy first.
As for Americans letting children and the elderly go without, I confess, it's true. It's called accountability. If a man wants to spend all his paycheck at the bar or the racetrack or the autoparts store, we don't have laws to prevent that behavior. Does Europe? So when said paycheck is gone...what, I am supposed to pay for his aged mother and children's healthcare? Are you really insisting I pay for somebody else's poor decisions?
Pretty much in a nutshell, that is the state of America. But being equal opportunity (choke, gag), we include the poor business decisions of our largest corporations and banking institutions.
I know, and it hurts to see us like this.