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In His Own Words: Draghi's Debasement In Two Minutes

Tyler Durden's picture




 

In case you missed it. Here is Draghi's two minute diatribe, courtesy of Bloomberg TV, sprinkled liberally with every algo-headline-seeking word required to raise the perception that something actually just happened other than smoke, mirrors, and and conditional help best summarized by the phrase we used earlier to explain the Catch 22 Europe finds itself in now: "Spanish bonds soar on expectations Spanish bonds will plunge to allow Spanish bonds to soar on ECB purchases... but only after Rajoy hands in his resignation and gives the key to Spain to the IMF"

 

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Thu, 09/06/2012 - 11:38 | 2768405 Snakeeyes
Snakeeyes's picture

Portugal's 10 yr sov yield fell 40 bps, just like Spain's. Poor Draghi. This ain't going to work.

http://confoundedinterest.wordpress.com/2012/09/06/draghis-hard-road-ahead-greek-and-france-unemployment-rise/

Thu, 09/06/2012 - 14:54 | 2768848 Dalago
Dalago's picture

"No exact quantitative limit is set on the size of outright monetary transactions (OMT)... because we want this to be perceived fully effective backstop that removes risk from the Euro area." - (Super) Mario Draghi

 

I've been saying its fucking perception all along because its been deception all along.  Its an orchestrated rally and may be an orchestrated collapse.  What ever you do, don't listen to your governments.  Buy gold and get a gun or something smart like that.

Thu, 09/06/2012 - 11:38 | 2768408 NotApplicable
NotApplicable's picture

I wonder if any of the algo's passed out from this round of Buzzword Bingo?

Thu, 09/06/2012 - 11:39 | 2768409 Fiat Currency
Fiat Currency's picture

SuperMario uses up his 3rd life

Thu, 09/06/2012 - 12:40 | 2768647 saturn
saturn's picture

Sounds like full blown central cancer to me.

Thu, 09/06/2012 - 11:39 | 2768410 Xibalba
Xibalba's picture

Do-over.  No wait...do-over again....ok...one more time...Call Timmy...- ok, ok...this one last time...do-over...BAN SHORT SELLERS...ok, this time it will work....do-over

Thu, 09/06/2012 - 12:25 | 2768582 ZeroIQ
ZeroIQ's picture

Do you also want to hear Draghi's definition of a "fully effective backstop"?

 

Thu, 09/06/2012 - 12:59 | 2768706 MillionDollarBoner_
MillionDollarBoner_'s picture

A butt-plug ?!?

Thu, 09/06/2012 - 11:41 | 2768414 fourchan
fourchan's picture

E' non bene. Tutti roti.

Thu, 09/06/2012 - 11:41 | 2768416 DrDinkus
DrDinkus's picture

call the close tomorrow

Thu, 09/06/2012 - 11:42 | 2768421 MillionDollarBogus_
MillionDollarBogus_'s picture

Spain 5 year bond yield is down 6.19%

I'm screwed....

Forget everything I recently said about buying EU bonds... 

Thu, 09/06/2012 - 11:49 | 2768444 nope-1004
nope-1004's picture

lol 

Thu, 09/06/2012 - 11:43 | 2768428 daz
daz's picture

potential spillover to the euro area REAL economy... 

Thu, 09/06/2012 - 11:43 | 2768432 No Euros please...
No Euros please we're British's picture

MMMM, I guess I'm being stupid here. If I were Spain and Italy I'd stop issuing bonds greater than 3 years maturity. Then raise all my re/finance on 2 or 3 year bonds bought by the ECB. After all, I meet all the conditions for unlimited bond buying, right?

Thu, 09/06/2012 - 11:45 | 2768436 pazmaker
pazmaker's picture

i'm suffering from EURO news overload...help!

Crash and burn already!

 

Thu, 09/06/2012 - 11:45 | 2768437 Bastiat009
Bastiat009's picture

It's not like we have to let them rape us. We could always vote for the people who have been right all along but since elections are just about who is going to pay for my condom and whose father was blacker, we're not going forward, despite what they say.

Thu, 09/06/2012 - 11:47 | 2768441 hombreloco
hombreloco's picture

Just goes to show one cannot short corruption.

Thu, 09/06/2012 - 11:47 | 2768442 Cognitive Dissonance
Cognitive Dissonance's picture

Was that as good for you as it was for him?

Thu, 09/06/2012 - 11:48 | 2768445 HaroldWang
HaroldWang's picture

No time for this, we have the AMZN event in an hour so we'er all buying 300+ p/e stocks today!!

Thu, 09/06/2012 - 11:50 | 2768449 Abraxas
Abraxas's picture

People behind the WTO, IMF, US government, European super government and many Asian and South American countries are neo-liberal aka neo-con fascists with no ideological, religious or moral brakes and with a single-minded goal: enslavement of all. Anything these clowns say or do is to get a step closer to accomplishing this goal. Call it a conspiracy theory if you like.

Thu, 09/06/2012 - 11:51 | 2768453 buzzsaw99
buzzsaw99's picture

shorts scared of draghi. lulz

somebody pulled my tail! [/cowardly lion]

http://www.youtube.com/watch?v=r2qoxiDj3gI

 

Thu, 09/06/2012 - 11:49 | 2768454 machineh
machineh's picture

Central planning, bitchez ...

This time will be different!

Thu, 09/06/2012 - 11:50 | 2768456 UTICA CLUB XX PURE
UTICA CLUB XX PURE's picture

Did he say he was sterlized? Hope so...

Thu, 09/06/2012 - 11:50 | 2768457 Dr. Engali
Dr. Engali's picture

The video afterwards has a blond bimbo talking about Bill Clinton's speach last night. She might as well drop down and start giving him a Lewinski right now.

Thu, 09/06/2012 - 12:19 | 2768561 Cognitive Dissonance
Cognitive Dissonance's picture

Is a "Lewinski" a proper noun or a proper................

Never mind. :)

Thu, 09/06/2012 - 13:04 | 2768725 MillionDollarBoner_
MillionDollarBoner_'s picture

"Lewinski" is a verb - a "do-ing" word...

Thu, 09/06/2012 - 11:51 | 2768458 Colonel Klink
Colonel Klink's picture

Courtesy dictates you flush after so much diarrhea.

 

Where's Cog's buttplug when you need it? ;)

Thu, 09/06/2012 - 11:52 | 2768462 Inthemix96
Inthemix96's picture

Here draghi, take on these wise words my good man.

Fuck off you stupid cunt.

Fixed it, see?

Thu, 09/06/2012 - 12:02 | 2768500 Abraxas
Abraxas's picture

I wish he did, but he won't. You see, he only obeys his masters. He's got a task to do, and by God he'll see to it that it's done.

Thu, 09/06/2012 - 11:56 | 2768476 Jason T
Jason T's picture

Central banks will own the world in 5 years time.  

 

Thu, 09/06/2012 - 11:58 | 2768485 ArrestBobRubin
ArrestBobRubin's picture

Nah.... central banks won't exist in 5 years, certainly not in their current form.

Thu, 09/06/2012 - 12:05 | 2768517 Abraxas
Abraxas's picture

I don't see anybody threatening them, nor I see them rushing to commit suicide. Pray, tell why you think they'll disappear.

Thu, 09/06/2012 - 12:30 | 2768600 ArrestBobRubin
ArrestBobRubin's picture

They slit their own wrists by the day. Further debasing their fiat "currencies" and losing their gold to the East.

What channel are you watching?

Thu, 09/06/2012 - 12:56 | 2768695 Abraxas
Abraxas's picture

What makes you think that what they are doing is not part of the plan?

Thu, 09/06/2012 - 13:13 | 2768756 ArrestBobRubin
ArrestBobRubin's picture

So now suicide IS part of "the plan"? I thought you ruled that out in your first comment..

Thu, 09/06/2012 - 13:24 | 2768792 viahj
viahj's picture

paper claims.  trying to take and hold possession will be a bitch.

Thu, 09/06/2012 - 11:56 | 2768479 tahoebumsmith
tahoebumsmith's picture

Thomas Jefferson's worst fears have now gone global.. A world wide Ponzi scheme run by the banks and controlled by a cephalopod.

What future do you see for the children of the world?

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered...I believe that banking institutions are more dangerous to our liberties than standing armies... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

Thu, 09/06/2012 - 12:20 | 2768566 NotApplicable
NotApplicable's picture

Now, why you gotta go about dissing cephalopods?

Thu, 09/06/2012 - 12:53 | 2768683 ArrestBobRubin
ArrestBobRubin's picture

that's just ugly anti-cephalopodism Mister

Thu, 09/06/2012 - 16:06 | 2769270 eclectic syncretist
eclectic syncretist's picture

I see our children rising up and putting the sociopaths in their proper place.

Thu, 09/06/2012 - 11:57 | 2768481 ArrestBobRubin
ArrestBobRubin's picture

Good day to buy puts on Morgan Stanley. That stinking PoS is up 3.6% on this "news" today. As a result, the 15's and 16's are down nicely. Bargain.

Thu, 09/06/2012 - 12:12 | 2768540 buzzsaw99
buzzsaw99's picture

to the FAZmobile!

Thu, 09/06/2012 - 12:01 | 2768494 The Continental
The Continental's picture

Do guys like Draghi and Bernanke attend classes in how to bullshit and sound authoritative simultaneously. I think there could be a market for a CBT (Central Bankerspeak Translater; also Cock and Ball Torture). For example:

Central Banker: We pull conduct continuous monetary transactions (CMTs...ooooh) and purchase short term bonds without limit and introduce liquidity to stimulate economic activity and offset recent market downside risks and suboptimal employment statistics. These CMTs will be perfectly harmless as they will be sterilized.

Common Man: I'm unemployed because the economy is in a depression. The bankers are going to flood the market with printed money and make a bookkeeping entry claiming that they did no such thing. Prices have risen so fast that I can only afford canned cat food.

Thu, 09/06/2012 - 12:05 | 2768520 Colonel Klink
Colonel Klink's picture

"Do guys like Draghi and Bernanke attend classes in how to bullshit and sound authoritative simultaneously."

 

No it comes naturally for sociopaths.

Thu, 09/06/2012 - 12:47 | 2768667 Bastiat
Bastiat's picture

It's the core of an Ivy League education.

Thu, 09/06/2012 - 15:56 | 2769237 Colonel Klink
Colonel Klink's picture

Seems to be considering the sheer number of students caught plagerizing their papers.  Along with how to avoid business ethics.

^ for you

Thu, 09/06/2012 - 12:05 | 2768516 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Mario Draghula 'Vants to buy your bonds!  Muahahaha!'

Thu, 09/06/2012 - 12:10 | 2768534 Temporalist
Temporalist's picture

Debasement...it's not just a place where people put their PM vaults.

Thu, 09/06/2012 - 12:31 | 2768604 Colonel Klink
Colonel Klink's picture

And Deplane is where the fleeing 1% put theirs.

Thu, 09/06/2012 - 12:19 | 2768560 CitizenPete
CitizenPete's picture

OK "ocupy movement", here is your REAL chance to pester some REAL players (not just thier serfs in DC). #Occupy

http://www.sifma.org/events/2012/sifma_2012_annual_meeting/home/

Thu, 09/06/2012 - 13:31 | 2768810 MillionDollarBoner_
MillionDollarBoner_'s picture

SIFMA - what a bunch of cock-gobbling arseholes!

Thu, 09/06/2012 - 12:29 | 2768596 q99x2
q99x2's picture

He looks a lot older than he did last week.

Thu, 09/06/2012 - 12:37 | 2768635 steve from virginia
steve from virginia's picture

 

Good grief!!

 

The ECB will lend to sovereigns in the place of the banks who would ordinarily lend to the sovereigns but cannot because they are broke which requires the banks be bailed out by the same sovereigns which must be bailed out by ... a bank. How ... circular!

 

The central bank is solvent while all the others are not?

 

Where is the fucking (new) money? (Sorry, Monsieur, there is no more.)

Thu, 09/06/2012 - 12:44 | 2768660 Dareconomics
Dareconomics's picture
Not a Skeptic, Just a Realist

Draghi Still Isn’t Winning Over Skeptics – MarketBeat – WSJ.

If you offer an opinion outside the mainstream, you are labeled a skeptic. A better term would be realist, because the mainstream is very optimistic regarding Europe. Optimistic people label those who do not share their optimism as either pessimistic or skeptical.

This bond buying program changes nothing. Europe is in the midst of a funding crunch and desperately need foreigners from outside Europe to purchase its bonds, particularly those of the PIIGS. Due to the risk of insolvency, investors are demanding higher premiums for PIIGS debt.

Interest charges are a component of national budgets so a country affected by higher rates can either raise more money through tax increase, cut spending on social programs or borrow more money. These are not exclusive choices; a government could choose a blend of these options, too.

What people do not realize is that there is no magical fourth option. Let’s discuss why that is so.

The bond buying plan looks like that fourth option, but it will eventually cause one or more of the three options I outlined above to occur, just in the richer countries supporting the poorer ones.

There is no such thing as free money. When the ECB begins purchasing bonds, it will be withdrawing an equal amount of euros from the financial system. It will also insist on the failing countries enacting “reforms,” which will lead to shrinking economies in these countries. See Greece for an example of what happens during austerity.

The ECB will purchase bonds on the open market, mostly from banks. Then, they will turn around and sell these banks the bills from the ECB to mop up this liquidity. The result is that the amount of money available for lending has not changed.

Remember those austerity conditions? Well, they will reduce tax revenues, which means that the struggling countries will have to sell even more bonds to finance themselves. Increasing the supply of these bonds while holding demand levels consistent will have the affect of lowering bond prices or raising the interest rate. This will lead to more purchases by the ECB. This will also cause the bonds that the ECB already owns to decrease in value.

The ECB is owned by the countries of the EU. If it loses value, then the taxpayers of the EU are on the hook for these losses. The rich countries will have to increase their contributions to the ECB, and they will have to cut their own budgets, raise taxes or increase borrowing to pay for this.

Even though nothing changes in the long-term, in the short-term the ECB has bought some more time. Unfortunately, using the Greek situation as a guide, this time will not be used wisely.

Read more here:

http://dareconomics.wordpress.com/2012/09/05/eurozone-deficit-math/

Thu, 09/06/2012 - 12:47 | 2768668 Dareconomics
Dareconomics's picture
Not a Skeptic, Just a Realist

Draghi Still Isn’t Winning Over Skeptics – MarketBeat – WSJ.

If you offer an opinion outside the mainstream, you are labeled a skeptic. A better term would be realist, because the mainstream is very optimistic regarding Europe. Optimistic people label those who do not share their optimism as either pessimistic or skeptical.

This bond buying program changes nothing. Europe is in the midst of a funding crunch and desperately need foreigners from outside Europe to purchase its bonds, particularly those of the PIIGS. Due to the risk of insolvency, investors are demanding higher premiums for PIIGS debt.

Interest charges are a component of national budgets so a country affected by higher rates can either raise more money through tax increase, cut spending on social programs or borrow more money. These are not exclusive choices; a government could choose a blend of these options, too.

What people do not realize is that there is no magical fourth option. Let’s discuss why that is so.

The bond buying plan looks like that fourth option, but it will eventually cause one or more of the three options I outlined above to occur, just in the richer countries supporting the poorer ones.

There is no such thing as free money. When the ECB begins purchasing bonds, it will be withdrawing an equal amount of euros from the financial system. It will also insist on the failing countries enacting “reforms,” which will lead to shrinking economies in these countries. See Greece for an example of what happens during austerity.

The ECB will purchase bonds on the open market, mostly from banks. Then, they will turn around and sell these banks the bills from the ECB to mop up this liquidity. The result is that the amount of money available for lending has not changed.

Remember those austerity conditions? Well, they will reduce tax revenues, which means that the struggling countries will have to sell even more bonds to finance themselves. Increasing the supply of these bonds while holding demand levels consistent will have the affect of lowering bond prices or raising the interest rate. This will lead to more purchases by the ECB. This will also cause the bonds that the ECB already owns to decrease in value.

The ECB is owned by the countries of the EU. If it loses value, then the taxpayers of the EU are on the hook for these losses. The rich countries will have to increase their contributions to the ECB, and they will have to cut their own budgets, raise taxes or increase borrowing to pay for this.

Even though nothing changes in the long-term, in the short-term the ECB has bought some more time. Unfortunately, using the Greek situation as a guide, this time will not be used wisely.

Read more here:

http://dareconomics.wordpress.com/2012/09/05/eurozone-deficit-math/

Thu, 09/06/2012 - 13:33 | 2768820 MillionDollarBoner_
MillionDollarBoner_'s picture

"Optimistic people label those who do not share their optimism as either pessimistic or skeptical."

Or "terrorist"?

Thu, 09/06/2012 - 14:57 | 2769080 falak pema
falak pema's picture

the most interesting idea on this Draghi strategy comes from Bruce Krasting and his two tier analogy. Sterilising unlimited amounts of "conditionally" accepted club- med peripheral bonds, via the ECB balance sheet at the short end, is a can kicking operation that will hit the wall of balance sheet unsustainability; aka hyperinflation trend, and fiscal revolt amongst surrogate states. As the economic depression will wipe out the tax intakes.

It is unlikely tha 17 nation states with productivity and economic paradigms so different can wilfully coordinate fiscal harmonistation in a federal type budget exercise; to generate sustainable growth; all the while their inflation and/or interest payments go ballistic. 

Tears for Two-Tiers | ZeroHedge

Thu, 09/06/2012 - 15:22 | 2769149 de Cosmos
de Cosmos's picture

Eliminate tail risk indeed!  The central banks are swinging the biggest, fattest tails of all.

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