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One Massive Circle Jerk: Presenting The Scam That Is ECB Bond Purchase "Sterilization"
When discussing European sovereign bond purchases it is never polite to say the ECB "monetizes" when talking to "very serious people" - after all they "sterilize", or in other words, don't see an actual balance sheet expansion, as they offload the entire cumulative balance (which as of this week was €194.5 billion) onto other financial institutions. In this way, the bank supposedly does not take on interest rate risk, which in a feedback loop, is the cause and event of such modestly unpleasant monetary expansion episodes as the Weimar republic. What few discuss, however, is just where the banks get the money to actually buy bonds from the ECB. Well, as it turns out, all the money used for sterilization comes from, you guessed it, the ECB, in what is one massive several hundred billion circle jerk. In essence what the ECB does, by pretending to not monetize and pretending to sterilize, is taking on not only interest rate risk one level removed, but also bank solvency and liquidity risk! In turn, this makes the central bank even more undercapitalized in practice than it is (and at 50+ leverage, it is already pretty, pretty undercapitalized), as once the banking dominos start crumbling, it will be the ECB that is left on the hook... and thus the Fed and the US taxpayer. So perhaps while Germany is complaining every single day about the possibility of outright money printing by the ECB, it will be wise to ask itself: who is giving Europe's insolvent banks, which just borrowed a record amount of short-term cash from the ECB to be recycled precisely into such indirect monetization, their cash?
Below is the official announcement from today on the full sterilization procedure in which €194.5 billion in sovereign bonds had to be bid up by European banks, which submitted Indications of Interest for €233 billion.
But where did the €233 billion come from? Why from the ECB of course, or specifically from its weekly Main Refinancing Operation, which saw the ECB hand out €247.2 billion to banks at a rate of 1.25%, the same as the max rate on the Tender operation above. Just enough to cover the full monetization amount, and have a little cash left for pocket money.
Translation: one big circle jerk.
And for the easily offended set, here is Reuters with a slightly more PC explanation:
Euro zone banks' demand for European Central Bank funding surged to a two-year high on Tuesday, as fast spreading sovereign debt worries left lending markets virtually frozen and the ECB the only available funding option for many institutions.
Intensifying fears about the financial health of Italy and Spain have further hurt the interbank money market over the last fortnight as banks have continued to scale down the list of peers to which they are prepared to lend.
The ECB's weekly, limit-free handout of funding underscored the widespread problems on Tuesday with 178 banks requesting a total of 247 billion euros.
The amount was the highest since mid-2009 and well above both the 220 billion expected by traders polled by Reuters on Monday and the 230 billion taken last week.
"We don't need to look far for signs of tension in the money markets, with the ECB acting as the main intermediary with 1) deposits parked at ECB at elevated levels and 2) MRO usage also now increasing sharply," said IFR strategist Divyang Shah.
"The ECB is the main vehicle through which the money markets are able to make transactions, highlighting that we have not just a liquidity crisis on our hands but also heightened concerns over solvency," he said.
The ECB has reinstated some of its most potent crisis-fighting tools over recent months in a bid to try and calm tensions again, including ultra long-term one-year liquidity injections.
So far, however, the moves have done little to revive interbank lending. Banks are now borrowing more than 500 billion euros but data shows almost two thirds of that money is being deposited back at the ECB, compared to around one third after the collapse of Lehman Brothers back in 2008.
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You said circle jerk
speaking of.. jerk http://hedge.ly/gFWVSm
circle jerk ...circle of jerks ...jerks in a circle ...all the same really, a bunch of bwankers
Das ist ein zirkel ruck, ja?
Ringelpiez mit Anfassen
And the circle jerk will continue until the houses of ill repute and the slave traders (euphemistically known as global investment banks and mega-corporations) are shut down.
I wonder what human is buying EUR/USD all the time? Every time it goes down it pops up again. Tyler? Any idea? shouldn't we be sub 1.3300 already? How long is this crap going on?
1.33 is irrelevant. Does anyone care what the value of a roll of Charmin is versus a roll of Quilted Northern?
Price of gold measured in toilet paper is all that mattters now.
This waiting is so tedious. Can we just fast-forward to the hyperinflation, already.
Hyper-deflation you mean?
when this house of credit cards implodes just watch every asset class (stocks, property, commod's and even Gold) get absolutely fuking hammered
You just must the case for why hyperinflation is coming. The funny part is that I don't think you even know it.
No, I think he does but simply meant to say something like hyperinflation in everything you need for survival and hyperdeflation in everything you don't. Got physical assets and well-armed like-minded neighbors? You better.
I agree taraxias, it's not hard to figure out that hyperinflation is just around the corner because DEPOSITORS WILL BE BAILED OUT which puts a giant hole in this nonsense of a deflation theory.
Only if those funds go into circulation. Despite all the policies that have rewarded irresponsible behavior and punished savers over the years, I don't see people going out and spending like crazy. Maybe you need to be more specific regarding what you mean by "depositors". The money in ciruculation and velocity of money must increase substantially to give you a hyperinflationary environment in the traditional sense.
Stop looking backwards to predict the future, with 7 billion people on the planet and a one-world government calling all the shots (IMF, U.N., NATO - wake the fuck up, this is the reality) we are in an entirely unique situation here. There have not been any sorvereign nations for quite some time now.
It is a one world government and it essentially a one world currency being the USD because the USD is the world's reserve currency. And if the USD goes, then all fiat will disappear. By depositors, I mean people that deposit their money at a bank will not be able to get their deposits unless the banks are kept alive or the banks could even be allowed to die and the depositors would be the direction recipient of the newly printed cash in order to be made whole.
Velocity of money is a bunch of nonsense because people don't just bury their cash, they invest it and try to make a return.
The money in circulation must increase substantially or depositors lose their money.
Did people "spend like crazy" in Zimbabwe to create their hyperinflation? I don't think so. The reason hyperinflation occurs is because TOO MUCH MONEY IS PRINTED. All of your other talk is just dancing around the idea of how much money has been printed and how much money is about to be printed.
Look, cheap money (0% rates + QE) directs money into unproductive areas causing malinvestments. The economy is no longer able to keep up with the malinvestments, so in order to keep the malinvestments from appearing, even cheaper money must be created (faster QE since rates can't go below 0%), but the cheaper money causing greater malinvestments with hyperinflation being the end result. If the cheap money stops short of hyperinflation, then the malinvestments become exposed and depositors lose their money. If depositors are bailed out, IS the cheap money which keeps the game going longer.
THE ONLY TWO POSSIBLE OUTCOMES NOW IS DEPOSITORS LOSE MONEY OR HYPERINFLATION. Maybe the markets can again be fooled into the deflation idea for a very brief period, but I doubt it because the Bernank showed his hand back in 2008 by bailing out the banks and now everyone expects that the Bernank won't allow depositors to lose money.
People don't bury money or hide it in their matresses? Riiiiiiigggghhhht.
Way too many contradictions and falsehoods in your logic to even begin to deal with. I have faith in the value of my labor and my employees, time to get physical on soooooo many levels. Fuck the paper. Is your labor of REAL value, it fucking better be. Good luck idiot.
and you did not even comment on his "And if the USD goes, then all fiat will disappear"
LOL - LawsofPhysics, you are a spoilsport! ;-)
Oh, you're right deflation is coming. Look, Bernanke is on TV right now and he's raising rates to 20% in order to get ahead of inflation! Look, the super committee slashed spending by 40% and now the US doesn't have to monetize! Look at all of the bank runs and people running to the ATMs (which are becoming empty) because the banks aren't being bailed out!
Get a clue dude, all signs point to print.
"Get a clue dude, all signs point to print."
Precisely why the purchasing power of ALL paper is about to go to zero. Contradict yourself much fucknut?
Open your eyes and actually read what I type because I'm saying the USD will go to zero. Hyperinflation is near. I'm done wasting my time by talking to your worthlessness. Good luck to you and I hope that your employees can read better than you in order to pull your business through this storm that's about to hit.
So long as people need to eat, we will do just fine. Good luck.
"So far, however, the moves have done little to revive interbank lending. Banks are now borrowing more than 500 billion euros but data shows almost two thirds of that money is being deposited back at the ECB, compared to around one third after the collapse of Lehman Brothers back in 2008."
This say it all.
Why a liquidity crisis? Because everyoe's broke.
A liquidity crisis (no-one wants to lend...) AND a solvency crisis (...because everyone's broke) equals deflation.
Please, show me the inflationary sponge trhat can soak up all of this toxicity. Unrestrained money printing is like throwing a dishrag at the Pacific Ocean- at this point, no matter what happens, total deflationary destruction is assured.
Because we are past the point of no return as far as conventional economic remedies are concerned, there can be only one solution:
One world government centrally planned communist economy (complete with secret police, and gulags), bitchez!
"Why a liquidity crisis? Because everyoe's broke."
The probelm is a bit deeper than that dude. NO one trusts anyone else. Fraud is rampent and the rule of law is non-existent. If people really wanted to "fix" things they would have made damn sure that the integrity of their various professions was maintained. All paper "Financial products" are a fucking joke, time to get fucking physical on soooo many levels.
few in this site accept that in a fiat world debt is money and the amount that is paper is almost zero compared to what is on ledger sheets-- when the debt bubble goes all the zeros on the ledger sheets will go also-- the days of the free money to prop up commods, stocks , property, and even gold will be over. The thing that will be left will be labor--your efforts will have huge value-- It'll be "help me help me, I've fallen and I can't get up". The price of a helping hand will be astronomical.
I agree with you --+1
Yep, personally I am looking forward to this day. Fuck these paper-pushing fucknuts who have been stealing real wealth while providing no real value. I am confident in the value of the labor of my employees and my business. Crash the system already so we can find out precisely what the real value of everyone's labor really is, fucking bring it.
Don't forget about APDs (Adult Protection Device aka "diaper"). We are long Depends (they also make toilet paper) and feeling pretty good about it.
Ahh, but they are selling their gold to raise toilet paper....The question is: How much toilet paper do they need to wipe their asses?
its the FED circle jerk. Trade off between supporting Euro from crash and maintaining WS stock in pseudo levitation. But the ball juggling is getting tuff even for uber-alles FED. Ever seen a central banker doing a Bolshoi style great splits?
We may get that chance soon.
Forget about sub 1.3300. Fundamentals don't matter in this world. Even God won't live long enough to see EUR/USD go below 1.3300, let alone 1.1100.
Forever...until all savings, pensions, whatever are all inflated away.
By the time it's all done most of you won't be able to afford food let alone bullets. With that in mind you may want to prepare a couple of things.
Precisely. Ask any successful attorney in real estate or property/contract law and they will tell you that possession has always been 9/10 ths of the law. When the paper world has been burnt to the ground, possession will be all that matters. Physical assets of all kinds and well armed and like-minded neighbors would be all that matters in that scenario.
"By the time it's all done most of you won't be able to afford food let alone bullets. With that in mind you may want to prepare a couple of things."
How long did you spend in your bomb shelter before you realized it was safe to come out?
Inflation will matter some day, then some form of lazy american revolt (thought we had it with Obama but....), reset, rinse, repeat. Maybe some heads will role, maybe not, not during "Sweeps Week" though.
I guess you will be ecstatic when you are finally right, stockpile of bullets, canned goods\MRE's from the 50's and all.
Actually I own a farm and in the country side everyone owns a couple of rifles for different tasks.
So yes, I have preserves from my summer haul in the garden. I have livestock which to produce proteins. I have my own well with a back up hand crank. And I have about 500 rounds on hand. Roughly 1000 liters of oil in storage in addition to the 2000 litres for regular daily use on the farm. 800 pounds of feed, barn full of hay. And more tools than rona has on it's shelves. Plus a bunch of other things like BBQ's, etc...
I'm going to guess you haven't got any of the above, not even a basic pantry full of a week's worth of food. You live hand to mouth, maybe even check to check, that's fine you put yourself in that situation. If the power went out you would be eating dry cereal in a day because your milk would be rotting in the fridge. Probably couldn't even get a glass of water to wash down the dry hunks of cereal, that requires power as well to create pressure in the water system.
You have a very odd idea of what preparation versus survivalist is. Out of all the stuff on the property the Oil is worth the most. It powers tractors, trucks and cars. And yes I have physical silver and gold. I also trade equities, have for years, it has allowed me the opportunity to set myself up.
And no I won't be happy about it. What is there to be happy about in that situation? Most of us would be dead the same month from starvation, dirty water maybe violence. That's a lot of intellectual capital and skill that disappears. However that doesn't mean I should save anyone either, I am not my brother's keeper. If people are willing to work towards improving themselves and at least be sensible on preparation.
If you were as clever as you think you are, you would have a weeks worth of food that doesn't need to be cooked and some water handy. In your minds eye, is the week you can purchase for yourself not worth the effort because you aren't worth the effort? Or is it the chronic disease of suburb and city life called laziness?
Like fire drills, most people don't think they need one until the fire happens. Doesn't take much money, most of the process is putting in the effort to reach a simple goal. One week supply of food that doesn't require cooking in your case.
I see that we are like-minded. I also own a farm/ranch (really own, debt-free kind of own) and meet with my neighbors, who also farm/hunt/ranch. We all know that we are going to be our own last line of defense in the event that trouble arises.
"I have about 500 rounds on hand"
That's not really much. I'd set in a minimum of 1,500 rounds for each caliber, and also get some reloading tools. Close to me is an outdoor range where they let me scour for brass - and for free!
"You have a very odd idea of what preparation versus survivalist is"
I have to explain this to folks quite often too. The "prepper" has laid in a store of fresh water, fuel and food for when times are lean. The "survivalist" is going to grab his gun, head for the woods and die trying to steal food from a prepper.
I have told all of my relatives that if they don't have a minimum of thirty days of non-perishable food stored, they will be in a bind. They ignore me, so I make gentle reminders every now and then by mentioning when a local grocery store offers canned vegetables on sale for 3/$1, I always grab three or for cases when that happens.
"Or is it the chronic disease of suburb and city life called laziness? "
Do you mean that they won't be able to jump in the car and head on down to Chili's for that plate of baby back ribs? Oh, the horror. Maybe they'll just order a pizza instead. You can't explain what you are preparing for if they can't see the end result. I just smile and wonder how long they'll last when reality sets in.
In all honesty I have tremendous respect for farmers. They are some of the hardest working, salt of the earth type people. Shrewd businessmen for the most part too. I don't even have an issue with you being prepared for contingencies, seems it would be a practical endeavour as a farmer as not every harvest can be counted on.
However that level of preparation is just not viable for the vast majority of people in any country. People live in condensed areas and are totally reliable on outside support and infrastructure for survival, no doubt. But what are you going to do when those people come out to your farm to steal an ear of corn? Shoot them? What else are the '500 rounds of ammo' for? Regardless of how many family members or guns you have, if the sh1t hits the fan, like is being implied by some, I doubt if you (any of us) would have the resources to hold back a breakdown of society.
Keep in mind that almost any U.S. Marine Corp retiree can shoot a man at 100 meters without a scope. What about them and the lifetime hunters with the deer rifles. There are a lot of firearms in this world.
I suggest sir that unless you have 10,000 rounds (.50 cal) you are also ill-prepared for the collapse of society.
BTW - I've spent 4+ years in college and can attest that I have eaten a hell of lot worse then dried cereal. >8=P
Wow. I repeat, WOW!
"People live in condensed areas and are totally reliable on outside support and infrastructure for survival" OK, so it's impossible for you to have at least two to three weeks of non-perishable canned goods stored under a bed or in an out of the way place? A case or three of bottled water is simply unattainable for you? So I suppose that the government will be tasked to look after you in the event of any emergency?
"But what are you going to do when those people come out to your farm to steal an ear of corn? Shoot them?" Yes. Definitely. Why, do you condone theft? Now, if someone comes up to me and says they have to feed their family, I'm sure that I can find some work for them. Raising Texas Longhorns means that fences always have to be mended. Sometimes I need help putting hay in the barn. But, first and foremost - my responsibility is to MY family. If they try to take things I raise to feed MY family, yes, I will shoot them and anyone else that thinks that they can have free access to what my labor has wrought. No charity from me, but I am willing to feed those who are willing to work
"Regardless of how many family members or guns you have, if the sh1t hits the fan, like is being implied by some, I doubt if you (any of us) would have the resources to hold back a breakdown of society"
So, we should just give up, lay down and be trampled on by the hoards from the city? What a crock. What happens in those cases is that small communities like where we live band together and form small protective groups (community policing, vigilantism, etc.) It works just like our rural volunteer fire departments do. You city dwellers are just trying to excuse your unwillingness to be responsible for your own well-being. Don't look to us to save you - stay in your urban hell holes and perish.
"BTW - I've spent 4+ years in college and can attest that I have eaten a hell of lot worse then dried cereal. >8=P"
All that book learning and yet, you used "then" when the proper word should have been "than". I'm sure that seems to be money well spent.
Then, suggests order, i.e. I will go home and THEN go to bed.
Than, used comparatively, i.e. I will be better off THAN most others since I have a college degree.
EUR/USD is just a rate in a beauty contest - which one is the ugliest?
While relevant, all this ECB "sterilized" interventions have only to be less than the FED's.
Meanwhile the MegaBanks have heavy bets on EUR/USD to go to 1.30 for Year End and bets on 1.425 and higher for later.
There is a uniquely US/UK "faith" on how EUR/USD works, have you ever inverted the thing to USD/EUR for analysis?
Only my two cents...
This circle-jerk keeps me in stitches
As global Kleptocracy twitches
These desperate times
Lead to desperate crimes
I'm finally the first post you Bitchez!!!......(uhh, nevermind)
Third place is good...
+100 for rhyming with bitchez!!,
BITCHEZZZ!
Tyler, do you not care about the level of integrity on this site? Allowing posters to display the filthy and disgusting porn is bad enough let alone their potty mouths, but seriously detracts from your content and diminishes your professionalism. I used to enjoy reading the posts, now it's become a porn cult.
Michelle, I agree that a picture of a dude's saggy ballsack is not all that pleasant to look at. I suppose that for a female of delicate sensibilities, it could be positively revolting. Of course, we won't mention all of the coarse language, racism, anti-semitism, misogyny, and general loutishness that often appears in the comments on this site.
Ah yes, a depressing view into the general degradation of our modern culture...
But, Michelle, I must remonstrate. Where else in the whole of the internet can someone express themselves as freely? There is a reason this site is based on the Fight Club motif, no?
I am sure Voltaire and Thomas Paine said it better, but what price for free speech? I would submit that you pay the price when you have to endure such disgusting displays and vulgar, coarse comments as are often posted here.
Really, would you rather have a moderated forum, where Tyler must hire some pretty, demure intern (only virgins need apply) to catch and delete all of the nasty bits so you can't see them? Poor girl, imagine how traumatized she would be! Oh, and not to mention, no-one would read ZH any more, they'd all move to the next fight club venue. 'Cause free speech in an unfree world is what it's all about.
Nice try though, you pretty little fascist. ...Another empty kitchen...
Nonster, there are plenty of other sites to vent ones filth and doesn't need to be here. Exercising restraint doesn't mean a loss of free speech.
But I prefer this kind of unadulterated, open free speech. There's a lot of stuff on this site I read sometimes that personally offends me like the racism and insulting religions and other stuff. However, I love this site not just because it has the best news I read anywhere on anything relating to finance and economics but also because of people's opinions. There are a lot of smart people here, and I read and listen to all their opinions, regardless of the swearing or racial profiling or whatever.
At the other end of the spectrum, the MSM pages and other completely pathetic blog sites that moderate (or self moderate) their comment boards are a bunch of pussies, and there's also a lot of astroturfing that goes on there. We live in this bullshit era of political correction, and people feel the need now to try and not offend other people (that at the same time are actually looking and desperately want to be offended). At least here those cum swalloers get called out immediately here.
See? I can swear like a sailor too.. but I think you get the point now.
To the contrary, ZH is a safehaven for free speech and original thought. By necessity, it is largely uncensored (rumor has it that direct attacks on the Tylers aren't kosher)
Or, put another way, sometimes you feel like a nut - sometimes you don't.
(bitchez)
Yep. However, I am rather surprised at how many on ZH still actually think that there are sovereign nation states on this planet.
Just remember.. whenever this site reaches it's fame and notority, it'll be called out by the MSM as some fringe lunacy site that goes on and on about doom and gloom. That and there's rampant "racism" here, and people "swear a lot" and say careless or tasteless comments, and there's a lot of "porn" and "boobs", and sadly "ballsacks".
There'll be that attempt to heavily discredit this site.. but with the incredibly long track record of the Tylers being right or close to right, and with (most) people here contributing intellegent comments and constantly informing and educating each other of the state of the world economy and financial system, those fuckers will never get far.
excellent! love your work man!!
'In turn, this makes the central bank even more undercapitalized in practice than it is (and at 50+ leverage, it is already pretty, pretty undercapitalized), as once the banking dominos start crumbling, it will be the ECB that is left on the hook... and thus the Fed and the US taxpayer.'
The circle is complete. The Fed now has set the precedent for monetary policy in the future. The Fed bails out everyone as was expected...
So if all this money is easily created out of thin air then why allow yields to ramp higher in the first place ? Or is the fed conducting it's on version of waterboarding sovereign nations to implement technocratic regime change ?
That would require a plan and the ability to handle technology. The parlor tricks given by tptb are just that. The math itself will do them in and poor sod that has sat through an advanced calculus class understands that. The power of large numbers combined with ANY interest is a losing game after a certain point.
The fed's attempts to stop the run away train will be met with the same results as if you or I attempted to stop the train. One huge bloody mess.
Germanys 2nd biggest bank under fire. Commerzbank is droping to alltime low amit rumors, bank ist bankrupt - need government aid shortly in order to survive. Can't get money to fit equity quota
also an ariticle from Reuters but only in german so far
More (in germnan)
http://www.mmnews.de/index.php/wirtschaft/8920-commerbank-wieder-pleite
Geezuz H Christ...when Commerzbank can't come up with a pawltry $5 billion (FT: http://www.ft.com/intl/cms/s/0/56c41196-14ff-11e1-b9b8-00144feabdc0.html)
Then YOU KNOW the shit is hitting the fan in euroland finance. No wonder Unicredit couldn't hide their $15 billion loss from last quarter - no one would lend them any more money tp keep their Ponzi scheme going..
Good news! :)
A Ponzi scheme to make Madoff blush. However, at least he fooled folks. The ECB is fooling no one, which can only mean that the very banks it attempts to prop up...will eventually [like today] turn on the hand that feeds it in an attempt to save themselves.
There is zero credibility left anywhere in the banking industry in this world.
And Central Banks are the ultimate market manipulators and speculators (and not for good reasons - only to perpetuate the con that the financial ponzi is)! International criminals.
kinda the definition of ponzi scheme!!
I don't think they will sterilize the circle jerkers, then it would be kind of pointless wouldn't it?
Circle Jerk...circle jerk...CiRle JeRk...Circling the Jerk...
I tried to post Circle Jerk on the Yahoo Message Board several time sbut they alway sblock it.
Thank Goodness for Zero Hedge!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
There was a good article about Deutsche Bank yesterday too. Whatever the ratings agencies took 5 seconds to announce no changes after the stupid committee fumbled. People will still rush to treasuries and gold will stay in a range. I just wonder what the catalyst will be.
Try to imagine yourself as being the treasurer of any European bank looking at the calendar (one month before year end) and experiencing the current market environment. Then you can immediately explain both the record deposits with the central bank and the record MRO usage. No rocket science needed imo.
"Then you can immediately explain both the record deposits with the central bank and the record MRO usage."
Yup. But it's gonna be a lot harder to explain the spring bonus pool. At least they "outperformed" in some quarter, didn't they?
Perfectly normal. It's like picking the still-solid pieces of food remains from your own excrements, sterilize them, and eat them again. No risk of infection whatsoever.
P.S. You should mostly consume corn.
Thanks for the visual. I'm glad I'm not eating breakfast right now.
Is this "circle jerk" not normal in a way ? The ECB receives money from the banks with excess cash and distributes to the banks with a cash shortfall. Indeed, ECB takes on credit risk but it only hands out money for collateral (govvies) with a haircut. Not perfect, but workable...
You mean we can't trust our politicians or our central bankers. Please, say it ain't so.
ECB HAS LEARNT ALL THE US CENTRAL BANK AND BANKS DIRTY TRICKS...ABOUT MONEY AND HOW TO HIDE IT FROM ITS PEOPLE..DIDNT ALL THE PONZI STARTED IN THE US IN THE FIRST PLACE? WHERE WAS THE MOD IN THE FIRST PLACE, WASNT IT IN THE US?
The 194.5b Euro is as of close of business on the 8th of November. Pre EUROgedon 7.38% Italian 10 year and 204 France/Germany. Still waiting for last weeks figures and t+3 settlement from week prior.
And a 45.2 9+nice 96-day to 89 you 2.3% as well sir.
Belgium.
Chill out, y'all.
If the bond purchases are 'sterilized', they can't cause 'contagion'.
Yeah, they "sterilize" the way the Nazis planned to sterilize Jewish children by placing radioactive material in their school desks.
You mean like this?:
http://www.youtube.com/watch?v=trVouB84094
"Sterilize" sounds so clinical and businesslike...also suggestive of enthusiastic German design and involvement despite what may actually be the case. If it sounds appealing it must be so, right?
Of course, in the end private wealth and property will be delicately appropriated, diced with the remaining taxpayers from the previous recipe and sautéed in a light, white wine sauce - surrendering their savory essences to the spongy consistancy of the state which must never be allowed to collapse like a badly executed soufflé or even asked nicely do dine on cheaper fare.
After the circle jerk comes the spank fest
http://www.youtube.com/watch?v=S7fd4B5n0Sw
How to rob Italy of its gold has gone mainstream....
http://www.theglobeandmail.com/report-on-business/international-news/global-exchange/financial-times/the-case-for-gold-in-the-euro-zone-bailout/article2244441/
So europe is essentially one big ECB bank with thousands of branches.
This does make sterilization a meaningless concept.
well, you just described a "Banking System" in some PC incorrect terms
though "Mommy" only helps if you are a good "child" and buy "Daddy"'s Bonds
Italy in the Seventies was the perfection of this, including the next logical step: "Daddy"'s Ownership of the Children - the AngloPhone's Bane: Nationalization.
I have repeatedly warned several times here in ZH that the Continental Bags of Tricks is quite extensive. And this is just the beginning of sort.
Short them at your own peril (or With Other People's Money if you are a dirk).
There can be no price discovery in such a system.
They think investors are stupid.
Now I see why people are leaving supposedly stable sovereign european bonds.
You need to rearrange your argument. The reason that the ECB has assumed all the credit risk of the 'branches' is because the market is NOT that stupid. And since the market wants higher rates, and the sovereigns can't afford to pay the higher rates, the ECB has been dragged into the vacuum.
You write "circle-jerk" as if it were a bad thing.
The ratings agencies need to be aded to the circle, or downward spiral sounds more apt. When all the debt is appropriated proportionately according to individual country's GDP, they can start downgarding those on the brink, and even looking at supposedly good countries like Germany and Finland.
Those two counties must be thrilled to burden the debt of countries that have no capabilities of paying them back.
The loop odf doom continues. Tune in and drop out.
"Undercapitalized" is the key word. Many think that because a central bank can create CURRENCY, it need not worry about CAPITAL. This view is profoundly mistaken. The 2 are as diametrically opposed (for them) as night is to day. One can no more borrow one's way to prosperity than one can dine on one's own excreta.
you are slightly mistaken - a CB does not have to worry about Capital as such
it does need to worry about RESERVES - not during the Currency War "leg down" of course, but for the day when everybody starts to scream "break!" or "do something!" and you have to go into reverse mode.
Then it's the day you as a Central Bank discover if you have enough FX and GOLD. And if you have a badass break-the-fx-speculator's-back street cred.
Really, I thought a site full of gold bugs would know this... It's the reason why I am (a sort of) one
"a CB does not have to worry about Capital as such"
If you are speaking from the ECB's perspective, you are correct. But that's just because they have no gold, and the EURO is not really a currency in the classical sense of the definition. But given the above, they sure as hell are terrified to realize any of those loses that they have on all that EUROLAND debt that they are holding under their SMP program.
Europe is printing, US,japan,china,UK,all printing to fill in gaps, gold gold gold, politicians will have to choose between depression/recession or inflation, which do u think they will choose?
STFU shill.
Don't shoot shoot shoot that thing at me
Don't shoot shoot shoot that thing at me
He went downtown and he got on my gun.
Icarus is getting closer to the sun. His wings of central bank credit are going to flame out in spectacular fashion.
www.pmbug.com
That is just such a neat trick. And when The Fed want repayment it won't know any different, will it? Especially if nobody says anything.
Circle jerkus interruptus = LOTS of pissed off bankwhores
Ponzi Scheme Bitchez!
libertarian86.blogspot.com
based on the theory of No Label Needed, or pulling a QE off the shelf and removing the Label before using
the Blatant activities will continue pushing the Envelope, since they keep getting away with each last Envelope push
"The ECB is the main vehicle through which the money markets are able to make transactions, highlighting that we have not just a liquidity crisis on our hands but also heightened concerns over solvency," he said.
d'ya think?
LET THEM FAIL!
they are circle-sucking the life outa economic activity
by the time they get their "vig", there is nothing left
ask elvis costello!
even "less than zero" as we're "waiting for the end of the world" awki
"...it will be the ECB that is left on the hook... and thus the Fed and the US taxpayer."
How is it the US taxpayer liability?? ECB is the Euro states problem isn't it? So that would be European country tax payers being reemed. What am I missing?
The US taxpayer is on the hook in two different ways. First the FED has extended credit lines to the ECB for USD funding. If a EU bank fails, and the ECB doesn't pay back the FED, the US taxpayer pick up the tab. Secondly, if the IMF intervenes, and the client state fails, the US taxpayer will be affected because of the US contribution to the IMF.
Thanks. And holy crap. At which point does the US taxpayer run out of organs to donate?
That's the monitization game. We don't run out of organs, because we can just print them.
Monthy Python's Life of Brian style: Are there any easily offended here today?
If all the banks are having a liquidity crisis at the same time doesnt that inherently mean there is a solvency issue?
And because said loans are collateralized with PIIGS debt that the ECB does not apply the proper haircut to, the whole thing is, in effect, a covered eurobond.
Eurobonds, as previously discussed, are idiotic as they dilute poor fiscal management from PIIGS nations out into the wider eurozone, punishing prudent behavior. The ECB has gone ahead with eurobonds anyway.
If the ECB buys the bonds, then sells them to banks but gives the banks the money to buy the bonds who is buying the bonds from the banks? Is it the ECB again, the Fed, IMF?
I still don't understand central bank sterilization.
"I still don't understand central bank sterilization."
Don't fret about it. It's for their own good - can't have them reproducing, you know!