It Begins: ECB Calls For Bids In 3 Year LTRO

Tyler Durden's picture


So it starts - the ECB has just announced its request for bids for the next all important 3 year (1092 Day) Discount Window, pardon, LTRO operation, which is fully priced in now (and following which the market will look toward the Fed for future easing - enter Bernanke and his Humphrey Hawkins testimony tomorrow), and which will create even more negative carry for Euro banks, as the insolvent hedge fund formerly known as the ECB lends out cash at 1% (in exchange for what can generously be described as used candy bar wrappers) and pays back 0.25% on the same cash redeposited back at the ECB. For the results of operation tune in at 11:15 am tomorrow local time or 5:15 Eastern. The only practical result of this operation will be the expansion of the ECB's deposit facility to the mid €700 billions.

As for what the final size of the LTRO will be, just ask your hotdog vendor: he has as much guidance as anyone else. Regardless of the size outcome, one thing is certain - the banks that are found to use the ECB's Discount Window should prepare for major stock pain, as the market, devoid of easy targets, focuses on them next as the European stigma trade becomes the hedge fund divergence trade du jour. After all there is a reason why the Fed's Discount Window expansion lasted for all of 3 months, and ended up hurting the participating banks (ahem Dexia) more than any other Fed concoction during the early stages of the Depression.


And the ECB announcement:

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Tue, 02/28/2012 - 10:47 | 2203699 GeneMarchbanks
GeneMarchbanks's picture


Tue, 02/28/2012 - 10:53 | 2203714 slaughterer
slaughterer's picture

I submitted three Snicker Cruncher wrappers, and half a Mounds bar as collateral and the ECB sent me  €100billion to buy some new Hellenic Republic bonds.  Magic!

Tue, 02/28/2012 - 10:58 | 2203745 IBelieveInMagic
IBelieveInMagic's picture

The Dow was almost down 1 point this morning -- had me worried for a moment. Now it has been fixed.

Tue, 02/28/2012 - 11:06 | 2203779 TruthInSunshine
TruthInSunshine's picture

It's priced in.

Tue, 02/28/2012 - 11:11 | 2203799 Comay Mierda
Comay Mierda's picture

the can will be kicked in March, but the technicals are telling me that Q2 2012 will be one of the worst quarters in stock market history

Tue, 02/28/2012 - 11:21 | 2203853 trav7777
trav7777's picture

I bid $10B at -5%

Tue, 02/28/2012 - 11:15 | 2203818 disabledvet
disabledvet's picture

"fixed" indeed.

Tue, 02/28/2012 - 11:06 | 2203780 maxmad
maxmad's picture

IBelieveInMagic, you probably believe the Consumer CONfidence numbers that just came out too!!    If they are going to manipulate numbers they shouldn't make it so obvious..... pretty soon the only two people who believe them anymore (IBelieveinMagic and some guy in Omaha, NE) will be forced to question them as well.....

Tue, 02/28/2012 - 11:11 | 2203800 q99x2
q99x2's picture

If you zoom in on the graph it almost looks real.

Tue, 02/28/2012 - 11:09 | 2203794 slaughterer
slaughterer's picture

Now I just got an E-Mail from some guy at the ECB saying they are taking back half of my €100 billion because they say I am "addicted" to their "liquidity."  WTF?

Tue, 02/28/2012 - 11:15 | 2203815 brooklynlou
brooklynlou's picture

You should of listed some more candy wrappers as equity. I listed two stale bags of Halloween candy and they gave me €100 billion without any hassles.

Tue, 02/28/2012 - 11:12 | 2203802 Taterboy
Taterboy's picture

I bid one slightly used VHS copy of Zorba the Greek. In this revised version Alan Bates bails out Anthony Quinn. Again and again and again. (it's on a continious loop)

Tue, 02/28/2012 - 11:35 | 2203915 slaughterer
slaughterer's picture

I sent my secretary over to the ECB with some used "BigMac" and "Whopper" wrappers she collected from some trash cans during lunch hour, and the problem is now solved.   Whew, that was a close one.  But I heard some French banks are getting bigger loans sending in their empty wine bottles.     

Tue, 02/28/2012 - 10:48 | 2203701 Stoploss
Stoploss's picture

You can't fix stupid.

Tue, 02/28/2012 - 10:53 | 2203728 EscapeKey
EscapeKey's picture

Terrible defeatist attitude. I say we at least try. If we print another $700bn do you reckon it'll cover it? Or should we say $900bn, just to be sure?

Tue, 02/28/2012 - 11:07 | 2203786 Fips_OnTheSpot
Fips_OnTheSpot's picture

My "bet" (just informal) goes to 1.5-1.7trn EUR.


I just wonder when even 500bn is "priced" in, why is EUR/USD *rising*

Tue, 02/28/2012 - 11:22 | 2203860 Ghordius
Ghordius's picture

faith in Ben's printing presses? ;-)

Tue, 02/28/2012 - 11:31 | 2203913 Fips_OnTheSpot
Fips_OnTheSpot's picture

aaaah right, pricing in QE3^2. Thx ;-)


I want dropping EUR/USD - just for boosting my YoY silver/gold "booking gains" - while anyone is talking about losing or winning by ounces strictly stick to ONE OZ every time I weigh them ;-)

Tue, 02/28/2012 - 10:48 | 2203705 LawsofPhysics
LawsofPhysics's picture

In a word "bidless". 

Tue, 02/28/2012 - 10:49 | 2203709 Conman
Conman's picture

Free money for ALL! (except us)

Tue, 02/28/2012 - 11:16 | 2203822 Ghordius
Ghordius's picture

well, if you trade FX you do get lots of nearly free leverage. same as if you buy a house, take a student loan - it's free, free, free !!! money for nothing and...      sigh.

Tue, 02/28/2012 - 10:49 | 2203710 The Swedish Chef
The Swedish Chef's picture

You say "priced in", I say "not so fast". But time will tell...

Tue, 02/28/2012 - 10:50 | 2203719 JPM Hater001
JPM Hater001's picture

"I bid 12 clams.  Barney, what have you got"

"Ah, all I got Fred is a bad case of shingles and a ball of string."


Tue, 02/28/2012 - 10:51 | 2203721 trade the day
trade the day's picture

Did you say they will be serving hotdogs after the release?

Tue, 02/28/2012 - 10:58 | 2203747 HD
HD's picture

Now that's a happy ending!

Tue, 02/28/2012 - 10:51 | 2203722 bigwavedave
bigwavedave's picture

how can i get me some?

Tue, 02/28/2012 - 10:52 | 2203723 Marge N. Callz
Marge N. Callz's picture

Not sure I understand how this whole money printing thing works.  QE here, USD goes down and Euro goes up.  QE in Europe, USD goes down and Euro goes up.  USD can't win?

Tue, 02/28/2012 - 11:01 | 2203760 Joe Davola
Joe Davola's picture

Perhaps the central banks are defining "win" differently.

Tue, 02/28/2012 - 11:01 | 2203761 DogSlime
DogSlime's picture

Race to the bottom.

Winner is the first one to print a 100 trillion note.

Tue, 02/28/2012 - 11:07 | 2203781 Rynak
Rynak's picture

Everyone loses, but those who first get the printed money, get to blow it on bitches (classical as well as social media ones), icecream and crack.


Tue, 02/28/2012 - 11:06 | 2203782 Dr. Engali
Dr. Engali's picture

They aren't trying to win. They are trying to stay alive...and in power.

Tue, 02/28/2012 - 11:17 | 2203833 Ghordius
Ghordius's picture

four explanation above - all correct

Tue, 02/28/2012 - 10:54 | 2203731 disabledvet
disabledvet's picture

You mean "Bond pain" as "countries can no longer be financed."

Tue, 02/28/2012 - 10:56 | 2203742 HD
HD's picture

All Ben has to do is suggest they might ease further and that will be enough for the bulls to keep dreaming of record highs. The market is exhausted - the only move up now would be parabolic and that's much more bearish than a 20% pullback.

Tue, 02/28/2012 - 11:03 | 2203771 Dr. Engali
Dr. Engali's picture

When he does watch gold lift off.

Tue, 02/28/2012 - 11:18 | 2203836 HD
HD's picture

 Let's hope. Of course, the CME will ride to Ben's rescue...

Tue, 02/28/2012 - 11:02 | 2203765 BeachBanker007
BeachBanker007's picture

i have an amazing spiderman #129. hook it up!!

Tue, 02/28/2012 - 11:17 | 2203812 Dr. Engali
Dr. Engali's picture

I had an Amazing Fantasy #15 that I sold about 20 years ago. For all you perverts out there ready to jump on the title Amazing Fantasy....that was the first appearance of Spiderman.

Tue, 02/28/2012 - 11:02 | 2203766 q99x2
q99x2's picture

This path has been proven to lead to destruction so let's go down it.

Say what mother f'r?

Tue, 02/28/2012 - 11:02 | 2203767 Roni
Roni's picture

WOW MKT UP SHOCKER ....not really CTRL+P

Tue, 02/28/2012 - 11:05 | 2203773 malcom x
malcom x's picture

Wow, what a sad state this so called market has become.  With all these headlines and events, when looking at the screen, all I see is a bunch of algos bouncing fractions of one cent back and forth.  All else have abandoned the casino.  What a sad sad state our so called efficient "capital" capital markets have become.  It is actually very sad to see and bear witness to what is happening.  I do recall not too long ago, there was some logic and forward thoughts to investing (outside of the thieves, I mean bankers' insider trading, etc.)

Now, nothing matters, no one gives a damn about any such forward discounting mechanism or value.  All that matters is direction of the EURO/DOLLAR tic.  That is all the algos are now looking for and they push accordingly. 

With all this news out there, I will go out on a limb and call of the lowest volume outside of a holiday trading day today.  As everyone has left the building. 

Tue, 02/28/2012 - 11:13 | 2203804 zx12r
zx12r's picture

The market has become a ghost market. Events and trends are due to some sleight of hand magic that no one sees. Is the real market even in there anywhere? Or did it die completely somewhere along the way, and we've been following the imposter, inserted during some switch-a-roo?

Tue, 02/28/2012 - 11:05 | 2203776 StockHut
StockHut's picture

Can someone send the ECB some Mises and Rothbard books.

Tue, 02/28/2012 - 11:21 | 2203854 Ghordius
Ghordius's picture

don't worry, they have them - we are still in the downward leg of the global devaluation feast - the ECB is the trusty girlfriend of the FED, always one step behind the big boy

Tue, 02/28/2012 - 11:07 | 2203784 Caviar Emptor
Caviar Emptor's picture

ECB operations are resembling a game of Euro Monopoly more every day.

Roll the dice, hope you don't land in The Plaka, Plaza Mayor or Corso Garibaldi

ECB playing Mr Moneybags

Tue, 02/28/2012 - 11:08 | 2203789 the 300000000th...
the 300000000th percent's picture

Even if some amount of the "debt shell game" were to "fix" this, how would we root out the unprecedented ammount of corrution that has pervaded the system since all of this started? How could we ever go back to any sense of normal? 70% haircuts? Does'nt that just mean were not calling defaults, defaults anymore? Where would we go from here? I am stil holding out hope for such a terrible collapse that it hurts everyone, including me so much that all the people rise up from the ashes afterward and say, "never again!" Its going to take something terrible for people to get involved and get proactive. Otherwise its always "new boss, the same as the old boss".

Tue, 02/28/2012 - 11:10 | 2203795 optimator
optimator's picture

Hook up Binny to a polygraph for his Humphrey Hawkings testimony!

Tue, 02/28/2012 - 11:10 | 2203797 Dermasolarapate...
Dermasolarapaterraphatrima's picture

They refused my used Milk Duds box...I guess they just want the wrappers....I wish they would clarify.

Tue, 02/28/2012 - 11:16 | 2203826 eddiebe
eddiebe's picture


Tue, 02/28/2012 - 11:21 | 2203855 DavidC
DavidC's picture

Meanwhile, Apple breaks $530 and the NASDAQ back at post 2008 highs.


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