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Mark Grant And Rick Santelli On Europe's 'Bond-Turned-Bank'-Run

Tyler Durden's picture


We have discussed the realities of Spanish (and Italian and Portuguese and Greek) debt to GDP data relative to the official estimates a number of times over the past few months and just as Mark Grant tells Rick Santelli today, the sugar buzz of self-financed sovereign bond buying hides the truth - until now when that liquidity is fading. From inaccurate data to LTRO ineffectiveness, 'Grantelli' sum it up nicely as  the 'Bond Run' we have seen over the past few months (as professionals flee European banks and sovereigns) has now trickled down to the man-in-the-street and their equivalent - the bank-run.



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Fri, 05/25/2012 - 15:18 | 2463422 Future Tense
Future Tense's picture

It's interesting to think about what would happen to precious metals if we entered a deflationary banking crisis. Would we have a repeat of 2008? The following article provides a good argument to why precious metals would actually rise if we entered another 2008 like crisis:

Fri, 05/25/2012 - 15:28 | 2463458 battle axe
battle axe's picture

It is 1929 all over again,,,,,,

Fri, 05/25/2012 - 15:31 | 2463467 Alea Iactaest
Alea Iactaest's picture

I won't believe it's 1929 again until I see bankers jumping out of windows.

Fri, 05/25/2012 - 15:36 | 2463477 Xkwisetly Paneful
Xkwisetly Paneful's picture


The bank run stuff was interesting yesterday,

so today I decided to look at the cash deposits on hand of the one's I could easily locate,

and guess what I found?

Current cash deposits at a high mark or a low mark?

A hint-it is going to take a lot more imploring on zerobrains part to actually instigate a substantive run.



Fri, 05/25/2012 - 15:47 | 2463507 brooklynlou
brooklynlou's picture

Euro bank run, not USA bank run.

US has deposit insurance and the ability to print money. EU has no deposit insurance and printing money has to go through a committee process that would make a Dilbert cartoon look like normality. If the run starts (which it has) and gets some panicky momentum behind it then it all goes tits up in a hurry in Europe. A EU bank run does not necessarily mean one will occur here.

Fri, 05/25/2012 - 16:06 | 2463557 Xkwisetly Paneful
Xkwisetly Paneful's picture

Hi Lou,

Thanks for taking the time.

My post was specifically referencing a piece about a US and Singapore bank run.

However, I am going to dispute part of what you posted, given that these banks had and I guess still have access to the FED discount window for short term cash shortfalls:

UBS, Switzerland’s largest bank, was the biggest borrower from the Commercial Paper Funding Facility, tapping the program 11 times for $74.5 billion.

Six European banks were among the top 11 companies that saccumulated the most debt overall -- a combined $274.1 billion .

Dexia tapped the US government for $53.5 billion. Other European users included Barclays Plc in London at $38.8 billion; Royal Bank of Scotland Group Plc at $38.5 billion; and Paris-based Natixis at $27 billion.

The Fed listed borrowing for Paris-based BNP Paribas at $41.8 billion.

Commerzbank of Germany borrowed $350 million at the Fed’s discount window.

Fri, 05/25/2012 - 16:38 | 2463664 jmc8888
jmc8888's picture

So the Federal reserve gave those banks physical euros?

There's a difference between computer money being sent over the atlantic and physical euros actually IN Europe.

If you withdraw money for any reason, do you withdraw computer money or physical money? 


When the time comes there very easily can be a physical dollar crisis in the U.S. given the fact that physical dollars inside the U.S. only makes up roughly 3 percent of deposits.  Given that a decent amount of that is in people's pockets during a normal time, it would just take probably 2-2 1/2 percent of deposits in the U.S. to be withdrawn for all banks (save some stragglers and hoarders or liars) to run out of money.

Sure the gov't could print more.  But given that we really only print $100 dollar bills as the max, and we make them so complicated, it'll take a decent amount of time to print the dollars necessary and then ship to the banks.  Depositers aren't going to want to wait weeks or months for it to happen.


Whether in Europe or the U.S. or anywhere, physical cash isn't computer cash.   Right now the topic is European bank runs. 


P.S. such loans are wholly illegal in a normal society.  We shouldn't be debasing our currency through the Fraudulent Casino Computer Money Facility.  Also all the banks listed are utterly bankrupted and should have been closed years ago.  Their time is coming.




Fri, 05/25/2012 - 16:39 | 2463669 bigkahuna
bigkahuna's picture

Go USA, we can print enough funny money for the whole world! You want some? Come and get it! After the fed is done and you default on the funny money, then they will demand a pound of flesh for the nothing you asked for in the first place.

Fri, 05/25/2012 - 16:41 | 2463671 bigkahuna
bigkahuna's picture

Oh yeah, it will not be your government and banks on the hook -- IT WILL BE YOU!!!!  Get a freakin' clue!

Sat, 05/26/2012 - 02:54 | 2464724 The Monkey
The Monkey's picture

Message to any bulls out there. It was fun while it lasted. Lights out.

Fri, 05/25/2012 - 17:09 | 2463731 piceridu
piceridu's picture

Dollars not Euros. The Fed can't stop a run on Euros...wait, can the Bernanke print Euros too? Does he have an Airbus made helicopter?

Fri, 05/25/2012 - 21:22 | 2464234 fuu
fuu's picture

You could have linked to the 2010 Bloomberg article:

Sat, 05/26/2012 - 12:53 | 2465520 bankruptcylawyer
bankruptcylawyer's picture

people on zerohedge about becoming mindless sheeep themselves. 


they don't want to think critically and this is why they neg you. 


your point is underscored by a reality most people here on zh SHOULD understand . 


too big too fail government supported banks backed by the fed will NEVER be out of cash. they will literally print this filth out of thin air. when their depositers take ALL their money out, the bank will just substitute it with fiat from think fucking air. 

the banks that do not have this protection will go broke and be "purchased" or --stolen-- by those banks that do. 

this is the consolidationg 'merger' trend that got us to where we are and is not likely to stop. it may well accelerate due to a financial catastrophe. the only steps going forward are political. 

it's a poiltical choice about who owns the right to print or to STOP printing money out of thin air. 



Fri, 05/25/2012 - 19:56 | 2464064 RoadKill
RoadKill's picture

Not even a EURO bank run.  A PIIGS bank run.  DB, CSFB, UBS and RBS will all benefit from this at least in the near-term.  Money will flow to Germany, Switzerland and the UK to get away from the risk of Euros turning into Gyros and Paella (or whatever they used fo currency before the Euro).  Yes, once everything is marked to market we MIGHT find out the big Euro banks are also screwed, but that will be phase 2.

So please tell us what Greek, Portugese, Spanish and Italian banks did you find with record cash?

Fri, 05/25/2012 - 20:24 | 2464110 Xkwisetly Paneful
Xkwisetly Paneful's picture

Santander was one of them but thanks for playing.

Is the rest a joke?

They came to the FED for imaginary cash. That makes a ton of sense.

The FED lent these entities cash to meet short term demands and of course they were mostly Euro demands, some of those entities don't even have a US presence.

Or can just pretend it didn't happen, an already quenched run on Euro banks supported by the US taxpayer.


Sat, 05/26/2012 - 11:42 | 2465362 oogs66
oogs66's picture

So far the bank runs seems to be limited to Greek banks - which are dead and now to Bankia - which is a mess.

i think there is a real chance that it spreads and that is what the ecb must stop from happening - i'm not convinced they will, but so far it seems more isolated to the worst banks

i assume much of the money being moved is electronic and is as much corporate accounts as it is retail accounts.  is it really people taking money out at the counter, or people shifting funds electronically?  the one seems easier to battle than the other.

Sat, 05/26/2012 - 03:52 | 2464782 THX 1178
THX 1178's picture

When bank runs start, they tend to occur at all the banks at once... the FDIC is insolvent! How will it serve 300 million angry patrons at once?

Sun, 05/27/2012 - 04:14 | 2466813 Element
Element's picture

FDIC is broke

FDIC is deep in debt.

FDIC has a 500 billion line-of-credit from Treasury

Which isn't going to be nearly enough ... will last all of about three hours ...

And you know this ... umm ... Tele Savalas?

"Who loves ya, baby?"

Fri, 05/25/2012 - 16:10 | 2463582 Banksters
Banksters's picture

Goddamned retards like you ruin the internet.

Fri, 05/25/2012 - 16:24 | 2463617 Xkwisetly Paneful
Xkwisetly Paneful's picture

sorry to interrupt your daily need for cyber affirmation.

didn't realize a retarded imbecile like me had the power to ruin the internet.

One day maybe I will be as smart as you and consider doomsday fear mongering brilliant instead of the stupid ass always been wrong to date simple output of complete fucking morons. Actually be such an arrogant pompous jackass to believe somehow my existence and experience is novel.



Fri, 05/25/2012 - 16:55 | 2463706 Banksters
Banksters's picture

I guess you missed the banking crisis that has bled into sovereign crisis.   Or QE 12 lite and twist.  Or ltro 1 and 2.  Or multiple easings by England, China, and Japan?


Now go punch yourself in the face, asshat.

Fri, 05/25/2012 - 20:21 | 2464123 Xkwisetly Paneful
Xkwisetly Paneful's picture

Really?!?!?!?! That route?!?!!?!?!

WOW the hubris around here rivals the ivory towers currently central planning everything.

Yea your's is a unique, apocalyptic existence.

Not that arrogant and pompous, only the Americans are that way.

Government's just started manipulating economies and markets recently.

Apparently the US invented inflation.

and ftr, I was on the internet retarding it long before the paranoid delusional targetted it for his daily crap.



Sun, 05/27/2012 - 04:28 | 2466815 Element
Element's picture

 You really are a fuckhead Xkwisetly Paneful.

People at zh are discussing primarily; finance, economics and it's relation to politics and surrounding society. 

The 'doomsday', as you put it, has occurred before, many times -- look at a hystery of the 1930s fool.

And it is clearly re-occurring now.

Your ranting like fuckhead in denial doesn't change that.  You need to watch Fight Club, go to a Cancer-Rotting-My-Groin group session and just cry it all out with your 'cry-buddy', get a group hug ... something like that.

We'll be here for you man!

Sat, 05/26/2012 - 06:59 | 2464911 Element
Element's picture


A hint-it is going to take a lot more imploring on zerobrains part to actually instigate a substantive run.


What makes you think zh and commenters words have anything to do with such runs occurring, or not?

It's not such discussion that matters ... it's observation, of what's happening, and already happened, that matters.

Insight and foresight is the result.

By the way, Reggie Middleton says it's BANKS that cause such bank runs.

We will see.

(maybe you should troll them instead)

Fri, 05/25/2012 - 15:38 | 2463484 Desert Irish
Desert Irish's picture

We can only hope...

Fri, 05/25/2012 - 15:45 | 2463502 resurger
resurger's picture


Fri, 05/25/2012 - 16:07 | 2463568 Harbanger
Harbanger's picture

It was Investors jumping out of windows, not Bankers.  Expect the same.

Fri, 05/25/2012 - 16:44 | 2463679 Turin Turambar
Turin Turambar's picture

Instead of seeing bankers jumping out of windows, I'd prefer to see them pushed out of windows.  Then, I'd know things were beginning to turn around.  ;-)

Fri, 05/25/2012 - 17:47 | 2463811 eatthebanksters
eatthebanksters's picture

how about if we push them?

Fri, 05/25/2012 - 15:47 | 2463508 Xkwisetly Paneful
Xkwisetly Paneful's picture

Very similar!

The obese latte drinkers have foregone their krispy kremes flipped off the plasmas abandonded homes and are now starving in the streets.

I see it all the time, moreso after I bang my head against the wall 1825times then post on the internet shortly thereafter.

Fri, 05/25/2012 - 16:48 | 2463692 Rubbish
Rubbish's picture

Hey hey, I'm a cake and ice cream type guy, never bought a latte anything. Not starving and don't even own a HD TV, now I might strategically default, don't tempt me, kk

Fri, 05/25/2012 - 21:12 | 2464223 Buck Johnson
Buck Johnson's picture

It sure is 1929 all over again, this time we won't have the money to paper over the bill.

Fri, 05/25/2012 - 19:52 | 2464055 RoadKill
RoadKill's picture

Ohh GOD - You are EXACTLY the type of PM bull that drives me nuts.  YOU CAN'T HAVE IT BOTH WAYS.

I'll give you that PMs will perform well in an inflationary environment.  But you can't claim they will perform well in both an inflationary and deflationary environment.  You are just kidding yourself.

And worse, you and the talking heads and scammers on tv selling PMs to Grandma are setting people up to be majorly ripped off.

PMs for inflation (or levered ownership of stocks with hard assets).  Cash for deflation (or AAA non-soverign debt).  PERIOD!!!

The only exception would be the total breakdown of society and law, where all 1s and 0s are wiped out.  And if you believe that you are better off with guns, ammo, desalination equipment, solar power and gas masks.

Fri, 05/25/2012 - 21:01 | 2464196 Day_Of_The_Tentacle
Day_Of_The_Tentacle's picture

In a deflationary environment, as in wholesale debt destruction environment without a simultanious printfest, all assets would fall in nominal price due to liquidation and flight to digital and physical cash.

But if the debt defaults include sovereign bonds, which would imply real risk to many bank deposits and the value of the currency itself, why would it be unthinkable, that a substantial part of that flight would go into gold?.

I mean, it doesn't matter, if the nominal price of gold goes down. It could still do well on a relative basis by falling less than stocks, bonds and industrial commodities, and hence retain its purchasing power better, than other assets.

I don't mean to drive you even more nuts. It is a genuinely meant question.

Fri, 05/25/2012 - 15:19 | 2463424 tom a taxpayer
tom a taxpayer's picture

Is it time to panic yet?

Fri, 05/25/2012 - 15:22 | 2463436 THX 1178
THX 1178's picture

<-----------The time to panic is now.

<-----------The time to panic will not be until later.

Fri, 05/25/2012 - 15:31 | 2463463 tmosley
tmosley's picture

The time to panic was three years ago (with the start of QE1).

But yes, you should still be "panicking" by buying gold and/or silver every month, and doing at least some amount of prepping.

Fri, 05/25/2012 - 23:04 | 2464428 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

It's certainly time for some Weimar-style voluptuous panic

Fri, 05/25/2012 - 15:36 | 2463476 Gief Gold Plox
Gief Gold Plox's picture

Time to panic has passed for the smart ones. I wasn't as smart, had my bank run a only a year ago and now keep only for current expences. I was about 2 years late, but I was young and stupid back then.

Fri, 05/25/2012 - 17:01 | 2463717 fattail
fattail's picture

The time for YOU to panic will always be later.....  don't worry I will let you know when its time.

Fri, 05/25/2012 - 15:39 | 2463450 CClarity
CClarity's picture

Greece should leave EZ ASAP (shoulda left 3 years ago) and default. Yes, it will be difficult, even terrible for some, but then it will start to get better.  And rest of southern Europe will spiral down too, but Greece will already be on the updraft.  There is no easy or nice alternative.  And they've been through it before.  They'll survive, barter, trade and deal with it.  And they can watch much of the developed world follow their lead.  And bank runs will ensue.  Batten down your hatches folks.

Fri, 05/25/2012 - 15:31 | 2463466 battle axe
battle axe's picture

It is a long weekend, this is the time when the crazy shit happens.....More so then usual. 

Fri, 05/25/2012 - 15:26 | 2463426 barliman
barliman's picture


"Truth! You can't handle the truth!"

Wait, one of them did say that, didn't they?


P.S. My bad, it was a flashback set off by the part about "regulators decidng in place of the rule of law".

Fri, 05/25/2012 - 15:20 | 2463428 debtor of last ...
debtor of last resort's picture

Party time.

Fri, 05/25/2012 - 15:20 | 2463430 VonManstein
VonManstein's picture
Santelliisaprick childish manerism
Fri, 05/25/2012 - 15:20 | 2463432 Manny
Manny's picture

Santelli got old real quick.

Fri, 05/25/2012 - 15:59 | 2463533 Itch
Itch's picture

We all get old real quick.

Fri, 05/25/2012 - 16:04 | 2463554 Dr. Engali
Dr. Engali's picture

On a long enough timeline.......

Fri, 05/25/2012 - 19:26 | 2464006 Hulk
Hulk's picture

Even the sun burns out...

Fri, 05/25/2012 - 15:23 | 2463437 dbTX
dbTX's picture

Bend over.

Fri, 05/25/2012 - 15:25 | 2463445 Temporalist
Temporalist's picture

Being disussed on Blmbrg:

China now "not" currency manipulators.


How the worm turns.

Fri, 05/25/2012 - 15:26 | 2463446 q99x2
q99x2's picture

When Spain goes pop how much time before the markets lock. Bank runs happen pretty fast so maybe weeks before Spain stops functioning. That puts us into QE 2nd half June territory. But, FED has to pump US tax dollars into EU and QE and the US markets all at the same time. Maybe the Bernank will throw himself out of the helicopter.

Fri, 05/25/2012 - 15:27 | 2463454 timbo_em
timbo_em's picture

Germany does not have TARGET2 liabilities. In fact, the Bundesbank has claims. Since these claims are against the ECB system, they might be more or less worthless, yet these are claims and not liabilities.

Sat, 05/26/2012 - 03:56 | 2464788 John_Coltrane
John_Coltrane's picture

Glad you brought up this.  The runs are going from Spain, Greece, etc. to Germany, Switzerland, Luxembourg & mattresses.  So, the former have TARGET2 liabiliites while the German banks are stuffed to the gills with deposits (which indeed are assets to the depositors but bank liabilities)

Fri, 05/25/2012 - 15:29 | 2463459 The Alarmist
The Alarmist's picture

And they have this discussion in a land that is now running annual deficits approaching 10% of GDP and adding upon a national debt already over 100% (almost 200% if you count state & local government debt).

Greece is nothing more than a distraction from the real fireworks building in another corner of the world.

Fri, 05/25/2012 - 15:31 | 2463465 midgetrannyporn
midgetrannyporn's picture

Santelli was better before he was brought to heel.

Fri, 05/25/2012 - 15:32 | 2463470 Dr. Engali
Dr. Engali's picture

Somebody forgot to turn on the robots to ramp the market up into the close.

Fri, 05/25/2012 - 15:35 | 2463474 barliman
barliman's picture


We still  have 26 minutes to the close ...

... take a nap or watch and see if we get a flash crash?


Fri, 05/25/2012 - 15:34 | 2463473 Temporalist
Fri, 05/25/2012 - 15:35 | 2463475 monopoly
monopoly's picture

So few make life so difficult for so many for so long.

Fri, 05/25/2012 - 15:37 | 2463478 junkyardjack
junkyardjack's picture

And market going to close green....

Fri, 05/25/2012 - 16:00 | 2463540 fuu
fuu's picture

Nope, but gold and silver will.

Fri, 05/25/2012 - 15:39 | 2463479 resurger
resurger's picture

Yo Tyler, you were pointed out here on the Jack Ass, was reading this:

the losses for JPMorgan were closer to $18 billion. Furthermore, an argument was made that the losses would top $100 billion in a year's time. Tyler Durden of Zero Hedge correctly boasts that their excellent publication first broke the story of the outsized JPMorgan losses, even the possibility of greater losses. But it was the Jackass that first pointed to the Interest Rate Swap to defend the outrageous USTBond tower during a March whipsaw event. The Jackass pointed to the tame European sovereign bond yields during the six weeks in question where JPMorgan offered their typical deception. PIGS bond yields were tame over those six weeks. During the interview, a big hat tip was given to Rob Kirby who exposed me to the tame bond market in Europe, and with emphasis to the whipsaw of high winds against the USTBond market in March. He identified the location of the source of disturbance. It caused a big shock wave that knocked the JPM machine off its footing. It has been suffering from loose cargo ever since.





Fri, 05/25/2012 - 15:57 | 2463529 dick cheneys ghost
dick cheneys ghost's picture


Turd Ferguson interviews Jim Willie 05/11/2012..........very interesting........talking about JPM/The dollar........



Fri, 05/25/2012 - 16:02 | 2463548 resurger
resurger's picture


Fri, 05/25/2012 - 15:40 | 2463492 Gloomy
Gloomy's picture

To Tyler, with love



Dallara Says Greek Euro Exit May Exceed 1 Trillion Euros
Fri, 05/25/2012 - 15:50 | 2463512 GlassSteagall
GlassSteagall's picture

Up the 'YingYang' ... CNBC finally got it right

Fri, 05/25/2012 - 15:56 | 2463527 Gamma735
Gamma735's picture

Rick knows what is going on.  

Fri, 05/25/2012 - 16:00 | 2463539 Ayn Rand
Ayn Rand's picture

Santelli is the only one at CNBC that "gets" it.  The rest are still in pump mode.

Fri, 05/25/2012 - 15:59 | 2463535 Ayn Rand
Ayn Rand's picture

Turn out the lights the parties over.

Fri, 05/25/2012 - 19:28 | 2464007 Hulk
Hulk's picture

Dandy Don has passed on, but his voice lives on...

Fri, 05/25/2012 - 16:31 | 2463642 Apathetic or Wh...
Apathetic or Whatever's picture

The Tyler's have continuosly reported and shown that the gig is up.  The only bullet left is to print money, and print money they will.  But the question long can this last before a total worlwide financial collapse happens?

Fri, 05/25/2012 - 16:36 | 2463661 world_debt_slave
world_debt_slave's picture

chicken little was right, the sky is falling

Fri, 05/25/2012 - 17:07 | 2463734 Paul the Great
Paul the Great's picture

If the US FDIC simply prints to back failed banks what will the paper be worth?


Fri, 05/25/2012 - 17:24 | 2463767 pmm009
pmm009's picture

Is YingYang a technical term?

Fri, 05/25/2012 - 18:48 | 2463932 SilverTree
SilverTree's picture

It means ones ass-hole or anus.

Fri, 05/25/2012 - 18:58 | 2463950 Acorn10012
Acorn10012's picture

The Dirtstar Express.

Sat, 05/26/2012 - 01:14 | 2464597 keeping appearances
keeping appearances's picture

Boy for a second there I thought Mr. Grant was discussing the United States at 143% of GDP....  Let's given the unfunded mandates and the U.S. is really running.... a five trillion dollar a year deficit, not 1.3 Trillion Dollars... I guess here in the U.S. were about 120% Debt to GDP.... Boy, at this rate, the U.S. will be catching up to Spain, Greece,

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