LTRO "Bazooka" Is Epic Disaster As Banks Scramble To Redeposit "Free Carry" Cash With ECB, Lose Money On "Inverse Carry"

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Tue, 12/27/2011 - 05:59 | 2012891 dieyoung
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Iran did it.

Tue, 12/27/2011 - 06:04 | 2012899 Chris Jusset
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Is it just me, or is the half-life of these emergency bandaid measures getting shorter and shorter?  You blink twice, and the Eurozone finds itself in a worse position than prior to the quick-fix.

Tue, 12/27/2011 - 06:27 | 2012914 TheFourthStooge-ing
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In a comment posted two or three months ago, I suggested, as pure hyperbole, that when the effects of the emergency measures didn't even last long enough to issue a press release about them, the can kicking would be augmented by an agreement to roll back the calendar by one year. Keep watching, because the descent by TPTB to full spastic pants-shitting retard will make an official calendar rollback appear sensible.


Tue, 12/27/2011 - 08:22 | 2013090 Temporalist
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Krugman was right of course.  (this is a surrogate post for MDB)

Tue, 12/27/2011 - 08:23 | 2013092 Oh regional Indian
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Very nice indicator 4th. Another indicator is when people run out of superlatives to describe something ordinary.

In the age of Hyperbole, the understated man is king.



Tue, 12/27/2011 - 11:45 | 2013589 Yancey Ward
Yancey Ward's picture

I, for one, am looking forward to 2011.

Tue, 12/27/2011 - 12:28 | 2013755 45north
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pretty funny

Tue, 12/27/2011 - 07:49 | 2013021 Sudden Debt
Sudden Debt's picture

I wish I got 0,25% of 400 billion for 1 month... For free...

Tue, 12/27/2011 - 08:04 | 2013044 Non Passaran
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Read TFA, bozo.
They are paying 1% and receiving 0.25%.

Tue, 12/27/2011 - 09:23 | 2013211 Vagabond
Vagabond's picture

This doesn't add up, why would they do this?

Tue, 12/27/2011 - 09:40 | 2013263 Sean7k
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In a monetary system that lacks a taxing authority, the only way to stick the people with the bill is either through sovereign bond interest or through currency debasement. If the governments are unable to tax enough to pay for the bonds, debasement is the only other method that works. 

The banks can now leverage these deposits and move into other instruments. We can now wait and see what shows up where next...

Tue, 12/27/2011 - 10:19 | 2013370 Raynja
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Tue, 12/27/2011 - 11:38 | 2013563 Fedophile
Fedophile's picture

This doesn't add up, why would they do this?

Because they think their losses would be larger than .75% if they did anything else with it.

Tue, 12/27/2011 - 12:02 | 2013657 larynx
larynx's picture

I wish i get 400 billion at 0.25% for a year. That should be enough to corner the silver market unleveredged.

Tue, 12/27/2011 - 08:57 | 2013160 Ned Zeppelin
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The objective is to keep things afloat until the bonus checks clear.

Tue, 12/27/2011 - 14:28 | 2014158 Red Raspberry
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Excatly as Richard Maybury of the Early Warning Report predicted a couple years ago.

Tue, 12/27/2011 - 14:37 | 2014180 Red Raspberry
Red Raspberry's picture

Stupid back button....

Tue, 12/27/2011 - 10:15 | 2013363 dereksatkinson
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Just speculation..

I think the banks are waiting for the last auctions of the year to put this cash to work.  I think the expectation that they are just going to pour funds into securities in this thin of a market is foolish. 

Tue, 12/27/2011 - 11:19 | 2013495 Elwood P Suggins
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It's all the fault of George W Bush.

Tue, 12/27/2011 - 06:01 | 2012894 Fips_OnTheSpot
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So - they are in so desperate need for more liquidity - they just park it into ECB digital shelters. What a farce.. at least it cannot add up inflation from there - for now.

Tue, 12/27/2011 - 06:50 | 2012939 AUD
AUD's picture

Ahh... yes it can, you're assuming the credit of the ECB is a standard of value, rather than bank credit.

Tue, 12/27/2011 - 08:12 | 2013063 DormRoom
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Dont' they need to park it because of the upcoming Basel II requirements?  I'm assuming if they park it, they don't have to dilute shares, to meet Basel II, thereby diluting bank execs option packages.

Tue, 12/27/2011 - 12:09 | 2013685 Fips_OnTheSpot
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upcoming would be Basel III (3).


Interesting the 7-day "parking" rose to some insane amounts, also. Just I might go to sleep until 01/01/2012

Tue, 12/27/2011 - 06:01 | 2012895 Practical Cogitator
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All shells -- no peas

Tue, 12/27/2011 - 06:03 | 2012897 trade the day
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Oh boy.  thin volume , on this news eurusd should hit 1.40. 

Tue, 12/27/2011 - 06:04 | 2012898 achmachat
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has anyone else noticed in europe that banks keep large sums (anything above 5000€) for much longer now (almost a week) when you wire money?

That looks like a huge sum of free money for the banks.

Tue, 12/27/2011 - 06:24 | 2012910 Catequil
Catequil's picture

yep, in my case for instance I had a small problem (technical mistake) with a money transfer and it took about 14 days to sove it. these 14 days the money were in the bank system....

Tue, 12/27/2011 - 06:08 | 2012902 Zaphod B.
Zaphod B.'s picture

So long and thanks for all the fish!

I love the sarcasm....'got all day'....'wait theres more'

Nearly coughed a raisin out me nose...

This week more stories on negative margins on all those 'phlat-screen TV' loss leaders?????

Tue, 12/27/2011 - 06:12 | 2012903 lolmao500
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German bonds are the new US bonds! Really bankrupt but the market haven't figured it yet.

Tue, 12/27/2011 - 06:26 | 2012913 misterc
misterc's picture

You seem to be the first one to get this here.
We Germans have 2 billion € in public on-balance-sheet-debt. We have bailout obligations of roundabout 400 billion, I think.
We have massive demographic problems. Public spending is out of control. Welfare spending is hilarious. Counties and cities are broke. A social study recently warned of public unrest aka London iPad riots at some point in the future in Ruhrgebiet (our rust belt).
Young people, even educated, are more or less locked out of good paying jobs. Time-limited, contractor jobs only.
It's almost impossible to have two kids on one middle-class-income. Your wife has to work, too. And it better be not a McJob. Cost of living is going trough the roof. We are a nation of renters. Leveraged financial instititutions and dubious companies like Annington buy up all the condos and raise rents in order to make management, creditors & stockholders whole (massive wealth transfer).
Oh yeah, and our so called manufacturing base is also going down (look at all the greentechs, they've gotten run over by China with cheap solar cells and so forth). Volkswagen, Mercedes-Benz & BMW are all massively vendor-financing with their own banking entities (VW Bank, BMW Bank, Mercedes Bank). Channel stuffing to the point where you have not a single parking spot available for your current car when visiting a BMW dealer (I have experienced this myself).
We are repeating the American mistakes at a very, very fast rate (McJobs, education bubble, real estate bubble in some parts of the country), yet our tax rates are not at historic highs but near historic highs. Not much room to go without risking capital flight, in my opinion.

How anyone can buy German bunds at all is beyond me.

Tue, 12/27/2011 - 06:28 | 2012918 Sandmann
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aka London iPad riots

Why do you say iPad. They were Blackberry Messenger Riots

Tue, 12/27/2011 - 08:27 | 2013098 Temporalist
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Either way they'll have to resolve to eating them.  How do you like your Android; with ketchup or mustard?

Tue, 12/27/2011 - 06:40 | 2012928 misterc
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One more thing, a friend of mine works at the BMW motorcycle plant. His opinion is that most parts come from other countries by now, they basically just stitch it together here in Berlin. But he thinks that's dangerous, as you have to deliver BMW quality if you ask for BMW pricing.
And he's just a temp worker there for the past year. He's been a temp for the last few years. He wouldn't be able to afford the BMW motorcycle he's involved manufacturing.

Sounds more like China, doesn't it? 

Tue, 12/27/2011 - 06:56 | 2012945 GoldBricker
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It's all inflation, whose pressure makes itself felt everywhere, all the time. There's the headline, visible price inflation, and then there's the other things you mention: working mothers, temp work, no jobs, quality dilution, and much more. These other things decrease our quality of life just as surely as higher prices, but less visibly.

What you see at BMW now was already happening with Volvo cars in the early 1980s, as more and more parts were made outside of Europe. Even the Chinese sub a lot of stuff out to still-poorer countries, like Vietnam and the Philippines.

The world still associates 'made in Germany' with high quality, and for good reason, but keep in mind that Britain and the US once enjoyed similar reputations.

Tue, 12/27/2011 - 08:47 | 2013130 Temporalist
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You know Germans make good stuff.  Sham-fucking-WOW!

Tue, 12/27/2011 - 07:37 | 2013000 deez nutz
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     Sounds more like China, doesn't it?

actually it sounds more like Amerika.

Tue, 12/27/2011 - 07:53 | 2013026 Sudden Debt
Sudden Debt's picture

Everybody can buy a BMW! Just apply for a loan and sign with blood.

Tue, 12/27/2011 - 08:07 | 2013050 El Hosel
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BMW    Bite My Weenus .  INDU futures are down 11,  the PPT must have had too much eggnog.

Tue, 12/27/2011 - 10:07 | 2013340 VisualCSharp
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Maybe unrelated, but I just got a class action lawsuit notification in the mail yesterday. It was regarding high-pressure fuel pump and turbo wastegate failures in BMW's N54 engine. When I owned my 135i I had to get two HPFPs replaced before I sold the car. It's a shame, too, because it was a great car besides.

Tue, 12/27/2011 - 10:57 | 2013447 Variance Doc
Variance Doc's picture

What year was the car?  I have a 2010 335i, drive the crap out of it (daily driver), and have never had problems with the drivetrain (just the radio had to get replaced).  Great car.

Tue, 12/27/2011 - 10:10 | 2013345 e-recep
e-recep's picture

Communicating vessels. China's living standards will rise, Germany's will fall. That's what you get when you have "global free trade". It's very profitable for huge corporations but not for the majority of the locals in the developed part of the world. Yet those locals have been voting for governments who advocated "free trade". Idiots.

Tue, 12/27/2011 - 10:53 | 2013436 AGoldhamster
AGoldhamster's picture

waoh - 1 of a million who got it finally ... sure you are not european

Tue, 12/27/2011 - 10:14 | 2013361 CvlDobd
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Look at my avatar. That's me on my R1. If you wait a minute my friend on his S1000RR should be along. It's a badass bike. It's just ugly IMO.

They opened up a new BMW dealer in Asheville NC and bikes seem to be selling well there. Makes me scratch my head. At the grand opening there was an Aston Martin and a Ferrari in the lot so maybe it's the really wealthy peeps buying the BMW bikes.

Tue, 12/27/2011 - 06:42 | 2012929 GoldBricker
GoldBricker's picture

Thanks for the update. I live in Belgium, where the economic situation is similar (except our state bonds are not considered that safe, and we have neither Merko nor Kozy to represent our parochial interests).

Regarding bunds as the new T-bills, I guess that bankruptcy is relative. Germany isn't solvent, it's just less insolvent than the other big players. It's like black holes; they're all voracious points of no return, but some might be 100 solar masses, while others are a million.

Tue, 12/27/2011 - 08:39 | 2013117 Temporalist
Temporalist's picture

All Belgium needed was a new government.  Everything is going to be great now that there is a gay socialist in charge.  And if that doesn't work you can get Van Rompuy to straighten the country out; he should be a national hero.

Tue, 12/27/2011 - 07:06 | 2012956 Jendrzejczyk
Jendrzejczyk's picture

Assuming your land(over)lords have a large mortgage on the apartmet building, would it be possible to organize a renter's holiday? If everybody in the complex got together and refused to pay rent for a few months, the loan might go into default and be forclosed upon.Evicting everyone in the building at the same time would be rather difficult and costly.

Not many investers would want to purchase such a troublesome property.

Using all the cash they saved from not paying rent, the tenants could then put a sizable downpayment on the (distressed) property and purchase it for pennies on the dollar.

Just a thought.

Tue, 12/27/2011 - 07:58 | 2013031 lolmao500
lolmao500's picture

Great idea. But you would have to do this in secret and quite quickly for it to work.

And even if it worked, the cops would come knocking with ``conspiracy to commit fraud`` arrest warrants.

Tue, 12/27/2011 - 10:09 | 2013342 VisualCSharp
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And when they do come knocking, make sure your dogs are kept safely hidden, lest they end up dead.

Tue, 12/27/2011 - 11:42 | 2013574 bbelux
bbelux's picture

you forget the healthcare...

Tue, 12/27/2011 - 06:13 | 2012904 Platypi4Lyfe
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Fucking shocking.. could it be this actually is structural rather than liquidity crisis? Woah man, trippy..

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