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Here Is Why Someone Will Be Disappointed By The LTRO

Submitted by Tyler Durden on 02/27/2012 11:41 -0400

Gaming out the impact of this week's LTRO2 demand on global risk assets is complicated by the ability of banks to mobilize collateral (how much can they pledge to the ECB and how much of that will be 'optimal' given the implicit subordination of senior unsecured debt holders), the use of those funds (carry trade economics are considerably lower and refinancing needs remain high), and the market's expectations (just how much more back-door QE is priced into European - and for that matter - US asset prices). Goldman Sachs surveyed its clients and found a gaping divide between banks and investors with the latter expecting considerably more than the banks - it seems someone will be disappointed - investors hope for more and banks expect to do less.

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Mon, 02/27/2012 - 11:47 | 2200529 Cognitive Dissonance

Where's the beef?

http://www.youtube.com/watch?v=Ug75diEyiA0

Clara Peller had it right all along. It all boils down to one question.

http://en.wikipedia.org/wiki/Clara_Peller

"Where's the beef?"

Mon, 02/27/2012 - 12:07 | 2200542 slaughterer

Looks like €666b is the sweet zone.

Mon, 02/27/2012 - 12:17 | 2200624 French Frog

How about .... Goldman knows that the figure will be higher than the one they give (re. banks expectations), loads of people are going to go short on the expectation of a major disappointment, the figure comes out higher, investors are happy and shorts are forced to cover yet again, pushing the market even higher.

Farfetched lol ?

Mon, 02/27/2012 - 12:18 | 2200630 Mr Lennon Hendrix

That is the same size as TARP, STIMULUS, QE 1, and QE 2. All were around $800b. Talk about can kicking.

Mon, 02/27/2012 - 13:08 | 2200814 JFK.4PREZ

I don't think the can kicking analogy represents the situation anymore. I think the speeding car towards the cliff is better because of complexity (represented by distance, velocity, acceleration). Slam on the brakes (hyperdeflation) and accelerate off the cliff (hyperinflation). We are probably going to lose control either way because we got this puppy at like 175 mph. Atleast we're going out in a Ferrari Enzo! I just don't think Bernanke's helicopter rotor is going to work as well as he hoped.

Mon, 02/27/2012 - 11:49 | 2200536 slewie the pi-rat

back-door QE!

Mon, 02/27/2012 - 11:50 | 2200538 slewie the pi-rat

...BiCheZ!!!

Mon, 02/27/2012 - 12:16 | 2200621 oogs66

System is a joke

Mon, 02/27/2012 - 12:26 | 2200647 RobotTrader

New 11-year highs on QQQ

Mon, 02/27/2012 - 12:33 | 2200662 Quintus

So....it's a massive bubble and we should all sell? Isn't that what you always recommend when things reach new highs?

Here Is Why Someone Will Be Disappointed By The LTRO

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