Here Is The Math: Carry Trade Profits From The LTRO Are Woefully Insufficient To Make Any Impact

Tyler Durden's picture

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
prains's picture

Pissing into the wind

greased up deaf guy's picture

pennies in front of a rollercoaster? snark snark snark :-p...

Oh regional Indian's picture

Wasn't quite the shot heard around the world, but the Indian Rupee fell 20% against the dollar in the past 3 weeks.


With this kind of volatility, soon to spread to the more stable pairs.... carry trade is a big reason for so much FX manipulation. If/when a major fx event happens, feels like soon.... watch out below, carry traders.

And thank goodness. Carry trade skewed global finance into the hands of mercantilist kleptocrats.



Hansel's picture

Really?  ~500 billion in Decemeber, and they will do another LTRO in February.  What if it's for another 500 billion?  Maybe it becomes a regular thing.  April, June, August, October, December.  There's 3.5 trillion.  Is that pissing in the wind?

fonzanoon's picture

I agree Hansel. I think people are premature in their end of the world calls. We did QE, QE1, QE2, QE 2.5 we are probably doing QE right now. They will do LTRO in February, some more in June etc. etc. etc. They won't let things implode that easily. I hate it. But I think thats what will happen.

walküre's picture

When Bill Gross calls LTRO openly a "shell game" or "3 card monti" then it doesn't matter how many more times and how many more billions they throw into the fire. In the end the fire of hyperinflation will consume all paper.

Who cares that the banks survive to see another day when their collateral is just jack shit?

willien1derland's picture

Too true - what is frightening to consider is that yesterday's ZH post in which Marc Faber indicated that derivative contracts would be worth ZERO was more commentary than prophetic (all due respect to Mr. Faber!) Think about it- if we post to this blog knowing this, what of the banksters who 'trade' this sh*t?! Counterpart risk?! Really?! So a couple of banks issues bonds & receive government gtds to pledge at the ECB how much longer can this nonsense proliferate?

ThrivingAdmistCollapse's picture

There are derivatives FOR derivatives at this point.  The entire financial sector is so screwed up that collapse might be inevitable.

JPM Hater001's picture

Can someone please explain to me where the money came from?  All I get when I look it up is something a pixie dust and a short incantation by Ben Bernanke in the shower with Harry Potter.

amitmittal's picture

again the easy math refer our article yesterday. but to put it clearly. yes, the ECB put out this facility so no collateral is required for it to be retuurned Eur 289 bln and the rest is available for banks to pay back debt due in there!


GeneMarchbanks's picture

'Because the last thing Italian banks can afford is another late Novemeber blow out in yields which brought the system to within hours of imminent collapse.'

Fed will have to step in to buy sooner or later.

'And in reality, for a €210 billion carry trade the maximum profit is... €2.7 billion!? And the market ramps on this?'

Why you still use the word market without quotes is beyond me.

Stoploss's picture

See the pattern? This has become more and more internalized as it has less and less impact. Like a spinning top collapsing in on itself is what we are witnessing.

midgetrannyporn's picture could be made into a monster if we all pull together as a team.

Pink Floyd

Have a Cigar

JPM Hater001's picture

I am manually adding +13 since I only get 1.

My wife bought me front from to Roger Waters performing The Wall in June for my birthday.

PS.  I wasnt actually Birthed.  Ben printed me.

nobusiness's picture

First we need to ramp the US market to maximize yearend bonuses.

nobusiness's picture

I'm moving to Michigan.  Everything is wonderful there.

GeneMarchbanks's picture

Yes it is. The weather, affordable housing, friendly people and great opportunities.


GOSPLAN HERO's picture

There are many comrades in Michigan.

The Axe's picture

markets are broken    who cares....they make no sense at all!!!!

Tic tock's picture

It also covers euro deposits in Swiss Banks, is there a chart of Swiss Money supply vs. ES?


virgilcaine's picture

But the Euro trades below $130.00.. something isn't quite right.  With all of this banker confidence it should go up... Right?  

GeneMarchbanks's picture

€ = $130.00!

Clearly that is overbought. I'd feel safe shorting here with no fear of being stolperized...

Ignatius J Reilly's picture

"Yeah, that team sure did suck, Moe.  They were the suckiest sucks that ever sucked."  -Homer Simpson.

Ignatius J Reilly's picture

"If" this doesn't work, TPTB will blame it on the name.  "We should have called this TARP 2, the sequel!"

virgilcaine's picture

Roof diving from a flaming house in Detroit,  is a new sport.

spanish inquisition's picture

At this point, it looks to me like you would want to take the cash and position yourself with derivitives at banks that still have assets you can foreclose on.

mess nonster's picture

OK! here is the list of "Banks that still have assets you can foreclose on."






shit. I can't think of any.

spanish inquisition's picture

I think there might be one or two left to trade on. How many will be determined by MFG fall out. If the dude loses his gold stored at MFG to the trustee, next stop, safe deposit boxes.

Hey! New trade platform for rehypothication, using safe deposit box estimate of contents.

StychoKiller's picture

Hey! New trade platform for rehypothication, using safe deposit box estimate of contents.

Hmm, kinda like that reality show based on auctioning off abandoned storage lockers...

imapopulistnow's picture

A couple hundred billion here, a couple hundred billion there, it adds up.

Caviar Emptor's picture

Indentured Servitude Bonds: the only answer.

Eally Ucked's picture

This shit is insufficient for anything. Not for covering bank loses, not for rebuilding borrowing power of govs or to keep GDP numbers at proper level. All western countries GDP's depend on financial services to the tune of 30%. Those fake numbers will collapse and just imagine what will happen when that sector imput goes down, lets say 50%.

defn8Dog's picture

Well someone is buying US long bonds.  As the market rallies.

Everybodys All American's picture

The important note to remember is that the ECB did not print. Because Germany will not go there. The banks issued more bond debt of which the ECB agrees to hold as collateral. The ECB then have allows the banks to borrow back from them at a low interest rate with the hopes that they will buy sovereign debt. That is crazy all unto itself. But... What has been left out of the equation is that through currency swaps guess who ends up with the collateral?

JR's picture

As Gerald Celente says, “Hold onto your hat, your wallet, and your wits,” as well as “Plan to start saying goodbye to conventional liquid fuels!”  Here are a few of The Trends Research Institute’s Top 12 Trends 2012 posted on Lew Rockwell today:

1. Economic Martial Law: Given the current economic and geopolitical conditions, the central banks and world governments already have plans in place to declare economic martial law … with the possibility of military martial law to follow.

5. Technocrat Takeover: “Democracy is Dead; Long Live the Technocrat!” A pair of lightning-quick financial coup d’états in Greece and Italy have installed two unelected figures as head of state. No one yet in the mainstream media is calling this merger of state and corporate powers by its proper name: Fascism, nor are they calling these “technocrats” by their proper name: Bankers! Can a rudderless ship be saved because technocrat is at the helm?

6. Repatriate! Repatriate!: It took a small, but financially and politically powerful group to sell the world on globalization, and it will take a large, committed and coordinated citizens’ movement to “un-sell” it. “Repatriate! Repatriate!” will pit the creative instincts of a multitude of individuals against the repressive monopoly of the multinationals.

9. Big Brother Internet: The coming year will be the beginning of the end of Internet Freedom: A battle between the governments and the people. Governments will propose legislation for a new “authentication technology,” requiring Internet users to present the equivalent of a driver’s license and/or bill of health to navigate cyberspace. For the general population it will represent yet another curtailing of freedom and level of governmental control.

12. Going Out in Style: In the bleak terrain of 2012 and beyond, “Affordable sophistication” will direct and inspire products, fashion, music, the fine arts and entertainment at all levels. US businesses would be wise to wake up and tap into the dormant desire for old time quality and the America that was.

FreeNewEnergy's picture

Has anyone ever summoned up the temerity to say that Gerald Celente is full of shit?

Let me be the first. "Gerald Celente is full of shit."

The guy has an uncanny knack for covering up his lack of facts and accurate forecasts with excessive hyperbole.

He's been about as wrong as Steve Liesman is stupid. Put them both in a box, shake, and you come out with the modern economist: Mostly wrong and utterly clueless.

bpom's picture

"So can we please move on from the LTRO as the 'Deus ex fecesiae'" is facetiae.

mess nonster's picture

Ah, yes, the view from a mountain of zeros is...


The ECB is the poster child of pulling oneself up by one's own bootstraps, or

a mental picture of a perpetual motion machine

or a practical lesson in alchemy

or an experiment in quantum mechanics- does debt behave like profit only when observed? Is liquidity a wave phenomenon, or is it a particle, which makes it analogous to solvency?

Central Wanker's picture

Woefully insufficient to fix the balance sheets? Probably.

Nice addition to the bonus pool? Absolutely!

virgilcaine's picture

Tyler bankers don't like Math, no use for it ..this is a new era of finance you know.

JW n FL's picture




Let someone else do da Maff!


see how easy it is to let other people handle your MAFF! for Yous!


JW n FL's picture




Northern Trust Webcast

Webcast Date:
Tuesday, January 31st 2012
10.00 UK, 11.00 CET
Presentation by:
John Krieg,
CFA, CAIA is Managing Director for Asset Management, EMEA, Northern Trust.

Brendan Maton Register for this event. The turbulence and uncertainty that has confronted investors during the past 10 years has given rise to shift towards passive investing. In response, a new range of alternative and, increasingly, customised index approaches has been created to help investors address their specific concerns. The ability to tailor an index to provide specific exposures or risk/reward ratios, then passively manage to this index raises questions about the distinction between alpha and beta.

Northern Trust recently engaged in research to examine more closely the practical implications for investors of the evolving use of passive investments in institutional portfolios. In particular, our research highlighted some interesting trends, including:
• Investors’ expectations for using passive management in the future,
• The effect of increasing passive use on investment decision making,
• Current concerns about achieving efficient beta, and
• Opportunities for removing unwanted biases and inefficiencies in existing indexes

Maybe they share something useful? One can ALWAYS REMAIN HOPEFUL! the back peddling is getting OLD!

RobotTrader's picture

Bye bye gold


Under $1,600

Another "Angel" getting gangraped.

"If I had only bought SPG instead.  $30 to $130 non-stop in 3 years with no corrections whatsoever.

And receiving dividend payments to boot.