Guest Post: SHTF In Austria Soon

Tyler Durden's picture

Submitted by Toni Straka of The Prudent Investor

It Takes Only a 4% Adverse Move and Austria's Banks Are Out of Business

Austria's banks sat on a derivative hoard valued at €1,786 Trillion at the end of June 2011. The volume of off balance derivative items is €99 billion more than at the end of 2010 but €800 billion less than a year earlier.

This dwarfs cumulative core capital of the banking sector, which stood at €75 billion or roughly 1/23rd of outstanding derivatives. It will take only a little more than a 4% adverse move against the desperate bets of the banks in the Alpenrepublik and they will be wiped out, can be read from figures released by Oesterreichische Nationalbank (OeNB) (German language only) on Wednesday and overlooked by all media so far.

The press release does not waste one word on the only trillion-figure that can be found in the economy of this 8-million small country. Austria's GDP rose 4.1% to €286 billion in 2010, according to official data.

Taking a clue from other affairs in Austria, where silence always means that something's boiling up, this figure serves well as a reminder that every Eurozone country has an explosive banking problem lingering in its backyard.

Already one year ago central bank governor Ewald Nowotny was not able to provide an ad hoc figure of the actual risk of these off balance items that are usually hidden away from prying eyes in undercapitalized bank subsidiaries. A year earlier the volume was €2.6 trillion. Industry insiders said at that point of time the actual risk after netting out short and long contracts may lie somewhere between 5% and 10% or €90 billion to €180 billion, based on the most recent data.

While the overall year-on-year reduction looks advantageous as banks reduced their risks, it makes one wonder what Austrian banks are betting on. This does not look as if they would hedge their risky East European lending activities and neither does it appear that Austrian banks are running book profits on the more profitable CDS contracts on PIIGS and other irrecoverable debts on the left side of their balance sheets.

Austria Will Soon Meet the Limelight of International Attention

Austria will soon meet the limelight of international attention again. On Thursday the ruling coalition tried to set a date for the necessary vote on change of Austria's constitution that would allow the Eurozone to proceed on the ill-fated way of Eurobond issuance. Due to the opposition from the Green Party and the two xenophobic parties FPÖ and BZÖ the vote did not reach the obligator 2/3 majority in the upper house.

The Green party had already issued a warning to the bank-controlled coalition in June, threatening to boycott a pro-Eurobond vote as long as Austria does not ensure that money lent to the PIIGS will be repaid absent the factor of pure hope.

The Greens got unexpected support from conservative hardliner and finance minister Maria Fekter. on Friday In an interview with Austrian press agency APA she said Austria will reject a top-up of the €780 billion European Financial Stability Fund (EFSF). She also addressed US Treasury Secretary Tim Geithner and advised him to put his own house in order before handing out fiscal advice to the Eurozone.

Austria's coalition is getting shattered day after day by new scandals alleging corruption involving a string of partly state-owned companies like Telekom Austria, public railways, the purchase of 12 Eurofighter jets (only 2 are operable during daylight hours), alleged kickbacks in the privatization of the country's real estate holdings. Scandals have so far centered on the conservative ÖVP and their former xenophobic coalition partners. But since Thursday allegations about current social democrat chancellor Werner Faymann concerning advertising of public companies in preferred media begin to make bigger and bigger headlines.

It does not only look like this little beautiful country that would love to dance year round on the by now infamous opera ball, where the level of celebrities has degraded from Sophia Loren to Berlusconi's former Bunga Bunga chick in the last decade, Rubina, has problems.
Austria will see a system collapse that is still mistaken as a run-of-the-mill crisis by officials who are increasingly busy holding on to their seats and the comfortable state pensions that come with it. Expect a rapid development aka deterioration once denial mutates into hesitant acceptance of the fact that matters are going to change in a big way.

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Mongo's picture

Timing excelent since buying gold for more that €15.000 at any given point is prohibited from now on...

A newly enacted Gold policy in Austria that restricts the free purchase of gold by individuals may just be the start of a European policy shift that might border on infringing an individual’s financial freedom.

-As per the new Austrian policies, individuals who wish to purchase gold will be restricted to purchase only 15000 Euros worth of gold at a time making gold an officially “restricted” commodity.




wang's picture
wang (not verified) Mongo Sep 16, 2011 1:08 PM

zero hedge on drudge

there go the servers


solyndra goldman sachs article

eisley79's picture

people should realize thats a european comma, aka period, and 1.7 Trillion not 1.7 Quadrillion :)


But great reporting, just helping out those mis-reading it cause they are NA.


let's get that 4% move going, and flush the ponzi scheme away

sushi's picture

Here is more detail on Fekter -



Austria's Finance Minister Maria Fekter was one eurozone politician at the meeting who voiced her objection to Mr Geithner's comments.

She said: "I found it peculiar that even though the Americans have significantly worse fundamental [economic] data than the eurozone, that they tell us what we should do."


riley martini's picture

 And yet the EU does the same thing as the USA, fascist corruption bailout for banksters in exchange for bribes and inside  information for more stealing. What a crook says and what a croof does two different matters.

thewhitelion's picture

Fekter?  I've never even met her!

spiral_eyes's picture

ah, austria!

this all has a delicicious parallel with creditanstalt... 

SWRichmond's picture

Yes, Creditanstalt, bitches.

Shit Bag's picture

What a shame.. and this in the same country where Menger, Von Bohm-Bawerk, Von Mises and Hayek were born..


ImnotPOTUS's picture

You forgot the landscape painter / former WW1 veteran / who had a hard time writing some book.

Shylockracy's picture

No, No! As the Austrians like to believe and have no shame to say, "Hitler was German and Beethoven was Austrian!"

Josh Randall's picture

Hey WANG, I think this Gold is restricted so don't tell 'em you're Austrian...OK, Fine!

Jackfish's picture

You ought'a get a bowl of soup with that gold, uh...looks good on you.

Panafrican Funktron Robot's picture

Austria is probably not on the radar of the people it should be on due to it's impressive looking numbers on the back pages of the Economist.  Sneaky bastards gonna start yet another war.

Comay Mierda's picture

that will only buy 1/10 ounce soon

Comay Mierda's picture

that will only buy 1/10 ounce soon

mrks's picture

Yeah, uhm... not really. The cruicial words are "at a time", which means you can buy another 15k worth of gold the next day, or even the same day if you bother to go to another dealer.

The 15k are just a regulatory limit imposed by the EU to deter money laundering. It isn't even a new thing as far as I remember - you're required to provide some form of identifiation for larger transaction for a couple years now, be it gold or paper money. That and the regulation applies to the whole EU, if I'm not mistaken.

I'd have to check if the laws changed recently, but just a couple months ago you could buy millions worth of gold without much trouble, as long as you are willing to show your drives license, passport or similar ID.

So, yeah... nothing to see here, move along.

DCFusor's picture

My banker (in USA) let slip that any transaction involving cash over a rather small amount (like $2k) has them making phone calls to the government to report it *immediately*.  She was trying to help me when I needed to move a bunch of money around -- keep me out of trouble (small towns are like that). Classified part of the oxymoronically named Patriot act.  You might think you're running under the radar, but you're not.  Everything is seen here, move along.

DaBernank's picture

The old rule was you had to show a passport above €15k now you just have to go from a large bank branch (all of them sell bullion), to the austrian mint, to another bank branch and it is still ANONYMOUS under €15k per purchase. I was not asked to show a passport to buy my tube of 1oz philharmonics from the mint today.

Keep an eye on the nationalist political parties in all European countries. When things get bad (they haven't even started yet) there will be trouble.

jaffa's picture

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barkingbill's picture

i'm not sure of this claim...I haven't seen any support of it anywhere else in the german or austrian media or anywhere at all. 

lolmao500's picture

Time for a German to take power in Austria and give them some payback!


The entire JPM SILVER suit is over at Turds site..take a look. Looks like SILVER will be heading WAYYYYY up

LookingWithAmazement's picture

I expect a bailout/creditline for Austrian banks soon. No Armageddon. Frohe Weihnachten!

Bicycle Repairman's picture

Do you see where gold is today, buddy?  Frohe Weihnachten, indeed.

GeneMarchbanks's picture

AAAustria, soon to be AAustria. And then finally, AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAuuustrriaaaaaaa!

Waffen's picture

1,786 Trillion? Huh what?

bnbdnb's picture

heh, they use comma's instead of periods for decimals. :)

Waffen's picture

Ah yes, I recall that now; sorry I was putting my American centric mindset into this Euro article.

Dr. Richard Head's picture

No problem for the Austrian people as long as they are holding gold.....or wait, they are not allowed to purchase any more -

Waffen's picture

Is this from any source or just the Austrian Banks?

Dr. Richard Head's picture

Not sure.  According to this article the network of dealers for gold is not as extensive as here in the United Fakes of America -

This chap says that the two banks there are denying this "rumor" -

Time will tell, but it fits in well with this ZH post.

All I know is that the NFL pat down policy just instituted here (not that I follow those circuses) has me eyeing the exits pretty hard now.

Waffen's picture

"NFL pat down policy just instituted here" please elaborate?

Dr. Richard Head's picture

The next target of these invasions will be malls based on the chatter I am hearing and when that happens it will be my time to abandon the country. 

My Austrian Jew family (Baum family) fled Austria during WWI as they saw what was coming.  The crackdown here seems to be accelerating.

Waffen's picture

The problem is, where does one go?  There is no libertarian free land to run to that the bankers havent corrupted.


Dr. Richard Head's picture

Iceland seems to be the only one that has stood up to the bankers.  Too bad they just reopened the currency arbitrage that sank the Krona in the first place. Who knows anymore.

Conrad Murray's picture

Where does one go? To the gun store, obviously. Also, to the library/book store/internet. Figure out exactly what type of land it is you want to inhabit. What political and economic constructs best support your ideal nation? Learn the theories, know them intimately, love them as you love your rifle. There will be plenty of people who have no idea what they are fighting for or how any of it happened if/when the moment arrives: Don't be one of them. The time for cultivating intellectually, psychologically, and physically prepared leaders is upon us and passing quickly.

No more running like bitches to avoid problems. Yes, that childish instinct is rampant throughout the whole of the American society(White Flight, drug abuse, divorce rate, etc), but it must be stomped out as ruthlessly as the oligarchs.

Throw the banksters off our backs and save this fucking country.

Shell Game's picture

++ You're rocking my world today, CM.  Absolutely agree.  Immerse oneself in self-defense and history.  Know history, know what works and what doesn't.  Being gaijin stacks the odds against you from the start if/when the shtf in your foreign locale.

Ferrari's picture

I've had this thought myself. And my expectations are lower. I was just hypothetically seeking a somewhat honest, non-kleptocratic country, and I couldn't really come up with one. Yes, Iceland is the exception that proves the rule. A commendable place, Iceland, but... Dunno. The climate & culture are too alien for my tastes. So I chose to stay here for now, working on my marksmanship. 

Monday1929's picture

Don't expect help from this crowd. You are now on a list.

Dr. Richard Head's picture

Shit.  I have been on the list since 2008.  Ever since I have started my protesting at the local level with police -

Mariposa de Oro's picture

Prison Planet (Alex Jones) has an article on it today.

Dr. Richard Head's picture

I try to always point cooraborating evidence from the MSM outlets. Unfortunately if mass public doesn't see the marque FOX, CNN, USA Today, tehy tend to ignore it as conspiracy.  I agree with Alex more often than not though - don't get me wrong.



Mariposa de Oro's picture

You're right.  The sheeple only accept MSM propaganda.  I quit following it several years ago, so now I have no idea what BS they're spouting day to day.  Thanks for the assist!


mrks's picture

This chap is right - those rumors are completely ridiculos and probably based on some fucked up translation of EU regulations which require some form of identification for transactions >= 15k EUR.

You've to show your passport of drivers license, hand over the money and that's it - off you go with as much gold as you're able to afford.

And if you want to stay completely anonymous, you just have to buy less than 15k EUR worth of Gold at a time - which is still perfectly legal. Considering the number of companies specialised in selling PMs, you could easily buy/sell more than a million Euro worth of gold a week without even having to leave Vienna, yet nobody would even ask for you name.

So much for internet-rumors.

GeneMarchbanks's picture

See first post Dr.Dickhead. He beat us, stings a little doesn't it?