Has The Imploding European Shadow Banking System Forced The Bundesbank To Prepare For Plan B?

Tyler Durden's picture

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tawdzilla's picture

Plan B??  Aren't we on Plan Z by now?

SheepleLOVEcheddarbaybiscuits's picture

this europe mess is getting really complicated.....maybe thats what theyre trying to do, make it too complicated for anyone to comprehend

CPL's picture

How is theft complicated?


You take without asking.  Couldn't be simpler.

clownfishheaven's picture

The complication lies in the pretence in generating alien excuses to justify said theft.

disabledvet's picture

"the mind martians made me do it"? what's wrong with that?

Misean's picture

So it's Plan 9 from Outer Space then?

Oh regional Indian's picture

Actually it's just Plan Six from the Stix. Just sexed up is all. All of this Euro focus, screaming, headline grabbing.... I'm sure the real shit is hitting th efan elsewhere. This much daily drama is a desperate mask.

What is that, that they are hiding?



sqz's picture

I'm not surprised people are confused. Merhling's article contains a lot of silliness.

There was no indication in Draghi's speech that he would be in the least bit interested in permanently expanding the ECB's balance sheet with non-sovereign debt (excluding the existing covered bond programs). If anything, many market participants read it and the most recent political announcements as laying the bare minimum fiscal groundwork and shared risk for large sovereign debt purchases.

Backstopping the banks is still a fiscal choice, even if it were implemented by the ECB. In that latter case, it would be a joint and several fiscal risk at the EMU level. Even to the ECB, this would be a step too far in fiscal involvement. It would be far more likely that the EFSF or another vehicle would buy at least the senior bank debt. It is this effective (joint) nationalisation that the politicians would have to work out how to do.

As for this strange solution of replacing the NCBs with private banks (yes, I know many CBs are "private" entities in law, but they are fully state backed and central authority), what is the point? These semi-NCBs would no longer be private any more and it would permanently crystallize the concept of TBTF/G-SIFI.

The Bundesbank is not the problem here. They may have some issues with the TARGET2 imbalances impacting on the flexibility of their monetary tools and having to keep mopping up the excess liquidity, but its nothing they cannot handle for the foreseable future, especially if they coordinate it with the ECB who also have unused sterilization tools.

I'd go as far as to say, there is absolutely nothing inherently wrong with the Eurosystem inter central bank framework. Of course, I couldn't say the same for having a currency area with no political or strong fiscal union in the first place.

Ghordius's picture

I completely agree with you, except with the "currency area with no political or strong fiscal union" part.

Yes, "the markets" have treated the peripherals "too well" for a decade (Squid "advise" to Greece was just the topping), so we'll have now a long period of "the markets" treating the complete EZ "badly". The "treatment" can be the "cure".

Central Banking advocates would say that's why you have CBs in the first place...

At the end, it's all about how you mop up this kind of mess (not really the first time):

- defaults (banks and/or sovereigns)

- or nationalization of (bad) banks

- or inflation

- or a combination of the above

sqz's picture

Please don't tell me after already 3 years of Eurozone sovereign crises hell and more to come, let alone the inevitable enormous consequences of the crises on not just their own real economies but on the entire world, that you believe the Eurozone is in any way sustainable without being a much stronger union?

There is simply no rational argument otherwise. Period. Either the Eurozone rapidly converges to at minimum a strong fiscal union or it will inevitably break apart due to its enormous structural imbalances.

Also, the solution cannot be driven by structural changes, almost every union everywhere has large outstanding structural issues that are extremely difficult to eliminate. For example, England vs Scotland, Northern Italy vs Southern, Flanders vs Wallonia, West Germany vs East, etc. The only reason these regions have a common currency is a political union. Even simply attempting to fix the imbalances causes serious fiscal problems.

So, from the outset, political convergence with a minimum of a strong fiscal union is not only what is historically proven to be required but is also expected by the global markets or the Euro will fail since a currency only has value while people (especially others) believe in it. If all your trading counterparties first ignore your debt, then start demanding even a small part of your trade must be denominated in external currencies or commodities, then your currency has failed. Just ask the South Americans, Asians and now Greeks how that worked or is working out!

The markets are just a function of confidence, expectations and time. It is not some conspiracy. We could go back a 50 years, 100 years, 1000 years and the exact same process we are witnessing today can be shown to have happened then as now. The only difference now, even with greater access to global resources, is that events happen faster and are more globally interconnected.

the tower's picture

Why is it that the US and the UK are running after Europe, flying in and out, practically begging Europe to do this and that? They NEVER run after Europe...

When the UK and the USA start to beg you KNOW who's in DEEP shit...


Think about it: the UK does not produce anything. The city gives the UK 30% of the GDP... 30%...


If the financials get worse the UK will be left with NOTHING, and it's not much different in the USA.

walküre's picture

The vast majority of people can't understand the judging on Dancing with the Stars. You honestly think they'd have any brains to get this?

Now the elite is a different matter. They thought their advisors would be able to make sense of it all and now they're at a total loss. The advisors wouldn't want to look like complete idiots to their masters so they make stuff up.

NOBODY understands this except for the money changers who have invented every scheme in the history of mankind to steal money from you and me without us knowing.



pods's picture

Clarke and Dawes explain the European fiat-sco very well.  



walküre's picture

Thanks for that. I passed it to an Australian friend.

But that was not my point. EVERYONE understands that too much debt gets you in trouble and too much lending among each other is but a circle jerk of debt.

That's what the world has become, a circle jerk of debt.

The elite understands debt and lending and eternal debt slavery - of course.

What NOBODY understands are these alleged plans to keep the show going now that everyone is tapped and everybody owes everybody debt payments.

Merkozy is a puppet. They play their part, they're actors. The plans are schemes from the grand masters of financial wizardry that have been bamboozeling the world with financial schemes forever! Why do we have leverage on monetary "products"? Why can a banker lend out multiple times the asset value their bank is holding? It starts right there and it evolved into further perversions that are clearly from sick and demented minds.


pods's picture

Agree totally with you.  When I got halfway through the article my head started to hurt.  Then seeing others here explaining it made me get that sad feeling that many WANT to believe that somehow this will work out.  So we can all go back to being good little debt serfs, slowly being sapped of our labor over the years so some bankster may aquire more power.

I think that this charade has to be done, so it looks like "they" are actually trying to solve a problem.  

What they are going to do is the same thing that the USA did in 2008.  Provide oodles of liquidity to banks and allow them to deleverage while we think things are getting better.  When the banks (the real ones, not the little guys) are healed, then comes the money spigot shutoff (austerity).  Then real property can be taken possession of and a new, bigger system will be implemented to save us.  The majority of people, being simple, will claw for this newer, better, more stable system that merely provides them more security.  

Each iteration of this process removes more property from the masses and concentrates it at the top.  There is no real endgame to this, as a new crop of debt serfs are born every year, being educated just enough to jump on the debt wheel to power some rich ass bankster's house.

Knowing all this, I merely try to inject a bit of humor every now and again to keep someone from sucking on a gun barrel.

BTW, check out their skit "The Front Fell Off" too, it is absolutely hillarious!



TrulyBelieving's picture

Agree with just about averything you say. Now when you say 'Merkozy is a puppet' I'll assume that not only her, but all the players in this insidious scheme are puppets. The problem I have with this is, I can't believe that she would get a call or message, somehow from her supposed boss every day or so telling her what she must do. Can't envision all the players getting their orders in this manner... but I might be wrong. Just thinking it's more like a culture that teaches one to behave and do in a way that the culture accepts as normal. Any odd behavior out of what is expected would not be tolerated, indeed would not even be thought of, by any person desiring inclusion in this culture. So what is driving them, or 'pulling their strings', is the own desire to please the culture. Now what drives this wicked culture is another matter, a matter of the heart. This is the perfect culture for a base human, all the human instincts being used to satisfy man-based cult. And morality would drive someone away from this culture. For a heart that desires justice, honesty, and integrity could find no peace in such a place. Just wonder if this is really what it comes down to, each individual choosing which culture to belong.

the tower's picture

PS here you can clearly see that "our leaders" actually get direct commands from their bosses: http://www.youtube.com/watch?v=QTcL6Xc_eMM

the tower's picture

I agree, Merkozy are working on solutions to not let this happen again - if we are to believe that - but no-one is working on finding solutions to the shit that we're in... because there aren't any... it's the biggest show on earth...

stuman's picture

I might be wrong but it seems to me...that as long as all (or most) of the parties sitting at the Monopoly table "keep" playing, keep opening up new game boards and using the new money...that the game can just keep going. It doesn't matter how much debt you have IF you just continue to borrow/print and keep the game rolling.

Everyone's going along with it because everyone knows they're screwed once the game ends...the answer?

Never let the game end ;)

At some point it'll crash, someone will have to leave the table to eat or go to the bathroom...one might even have a heart attack from too many energy drinks and no sleep...

But till then, might as well ride it till it breaks ;)  

masterinchancery's picture

Just a shell game, not complicated in any other sense.  Europe has far too much debt, generally stagnant economies, and rapidly aging and retiring populations.  Because of the bad demographics, the eurozone's problems will get worse every year.  So long term bets on its viability are doomed, and that has caused even short term bonds to decline sharply.  What the eurozone and its accomplished liar politicians need is a sucker with a lot of money--paging Bernanke.

Unprepared's picture

Plan B is a continuously recursive option: When all fails, try plan B. When all fails, try plan B. When all fails, try plan B ...

That way, you're not limited to 26 options.

BurningFuld's picture

There is the unlikely possibility of B1 B2 etc. Or B1a B1b..........

Misean's picture

Can't use that. Those are soon to be Euro zone credit ratings.

WhiteNight123129's picture

Good post, I guess that goes in teh same direction of people like Pettis and Bass arguing about a hard default of Greece pronto.


francis_sawyer's picture

Plan B??  Aren't we on Plan Z by now?

We're on Plan "B Cups"... (just ask Becky & Uncle Warren)...

MayIMommaDogFace2theBananaPatch's picture

Plan B?? Aren't we on Plan Z by now?

Plan B-12 is currently on-deck...


Zgangsta's picture

We have run out of alphabet letters to label the plans, so we have switch to Chinese characters (which ZeroHedge apparently doesn't support)

Buck Johnson's picture

They want out and since they don't want to yell it out, they will do it by stealth.  The only thing holding the EU (England too) up is Germany and if they go then everything ends.

Onohymagin's picture

Plan H, Recuscitate Adolph Hitler?

falak pema's picture

15 T shadow banking in Euro land; we live n learn. How does this compare to US?

LawsofPhysics's picture

Last I looked seriously it was over 70 T.  How do you say "fucked" in Chinese again?

LeBalance's picture

"interesting."  Chinese are too polite to say that.

Solarman's picture

LOL, you don't know many Chinese.

francis_sawyer's picture

May you live in 'INTERESTING' times...

Does that explain the correlation between 'fucked' & 'interesting' to you?


See... It's kind of how central bankers feel as well... They want you to live in 'INTERESTing' times... Or, as the Chinese used to say...

"Man who run behind car become EXHAUSTED... Man who run in front of car become TIRED"...

I am Jobe's picture

15T is chump change the way things are going. 16T by Election

disabledvet's picture

well, yeah...actually in the world of ones and zero's and where info tech is King then 16 trillion is actually "el zippo." having said that this is a very well put together missive. my understanding of 2008 however is not that the money markets caused the blow up but the commercial paper market--in other words "counter party risk." you simply didn't trust the other guy to come through with the money. this in fact CAUSED a money market fund to blow up ("break the buck.") this may sound crass but "that's nothing compared to Europe." i mean so what if Lehman failed? and the Fed i might did "did exactly the right thing." i frankly have no idea what Super Mario can do here. Sure "save the banks" sounds good--but when the country of Greece itself failed obviously the banks had long since become worthless. The only "plan" that works is the original one that i can see: "Germany must rescue Greece." It has done everything but. Now Germany itself is at risk cuz "there's no such thing as liquidity" if you're talking "currency union" either. I call this phucker "the ultimate arb play" when it first broke out--and outside of some "crazy government shit" that still holds true. German interests must rise to reflect the risk of existing in the currency union itself. is it like AT&T having to basically bankrupt itself because it failed to take over that other wireless provider? yeah, pretty much. it really doesn't seem all that complicated to me. obviously if you have anything deonominated in euros don't expect it to be getting more valuable for the forseeable future.

nmewn's picture

Saaay, we're startin to talk some serious unbacked paper here.

lewy14's picture

It's all backed. By more paper. It's paper all the way down.

LawsofPhysics's picture

Shadow banking finally realizing that unicorns shitting skittles are not real.  Fine with me, fuck these paper-pushing fucknuts.

Unprepared's picture

And BAC is what? Underworld? Fuck those too.

binky's picture

Buba taking it on the arches.

A Lunatic's picture

Lender of last resort..........True lender of last resort........Ultimate lender of last resort........Final lender of last resort......Super Duper Mega lender of last resort..........This could take awhile.

LawsofPhysics's picture

Wait until America learns that they have been on "double secret probation" all along.

I am Jobe's picture

NAH, Sheeples are still shopping like there is no more fucking waffle irons left in the country along with towels.