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Peak Desperation: ECB "May" Set "Secret" Bond Caps, Bild Says Without Citing Anyone

Tyler Durden's picture


Just when we thought we had seen and heard it (and by it we mean lies, innuendo and desperation) all, here comes the one thing that confirms where the ECB, and Europe, is concerned, we ain't ever seen nuthin' yet. According to Bloomberg, the ECB may set secret ceilings on the yields of govt bonds from countries requiring bailout aid, Welt reports, without citing anyone. Note the words "secret" and "without citing anyone" because they really are key. Because it is unclear whether Bild is truly stupid enough to assume that what amounts to a limitless bond purchase operation could remain a secret and not show up on the ECB balance sheet. What it really is, is merely a last step desperation attempt by Mario to keep on talking down bond yields, since a month into his "believe me" speech, the ECB has yet to do anything, let alone secret or not so secret yield caps, let alone Spain demanding a bailout, let alone the ECB even reaching a consensus with Germany and Bundesbank both opposing any incremental money printing. Welt says that the ECB could also set a range for yields, merely another absolutely idiotic "detail" in the ECB's "secret" plan. Supposedly the advantage of a range is that the ECB wouldn’t need to defend a set price at any cost, could tolerate S/T deviations. The (lack of) logic for this measure is that central bankers no longer believe that announcing a ceiling and making it public would be enough to calm markets. But nothing, nothing, can prepare one for what comes next: Secret yield ceilings would only work if they aren’t leaked says Welt. Yup. They said that. This is where blood shoot be shooting out of your nose at escape velocity.

Some additional minor details from Welt:

  • May be difficult to ensure secrecy as ECB bond purchase plan is controversial, not all council members in total agreement on best course of action
  • No decision has been made yet on how ECB can best act in  markets

We can only hope this is a desperate attempt at media disinformation to get the German public against further bail outs, or better yet, outright humor to challenge the Spiegel's just as desperate recent leak on not so secret yield caps, because if this is truly an "indication" of the ECB's remaining ammunition, then Europe has at most days left.


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Thu, 08/23/2012 - 06:50 | 2729580 Frastric
Frastric's picture

Secret yield ceilings would only work if they aren't leaked

Is this for real!?!

Thu, 08/23/2012 - 07:17 | 2729604 ghengis86
ghengis86's picture

No, we can't have secret yield ceilings and no one can leak info. We must have double secret yield ceilings!

Somebody hand me a bottle of jack to slam to complete this Animal House reference

Thu, 08/23/2012 - 07:34 | 2729621 malikai
malikai's picture

Well, it was good for a little pop on the eurusd. Not sure about the effect on sovereign debt though.

I see a bright future for 'bullshit idea specialists' at the ECB.

Thu, 08/23/2012 - 10:22 | 2730175 saturn
saturn's picture

Any caps still equal €Bonds. (With considerably high yield) = Germany burns extra money for utilizing caps.

Thu, 08/23/2012 - 07:55 | 2729665 Acet
Acet's picture

I have this secret tiger-repelling object which I can't tell you what it is. All I can tell you is that wherever it is, there are never any tigers around. Also I never take it with me to any places were there might be tigers, which is why no one ever sees the tigers acting strange when I'm around.

All true, trust me!

Thu, 08/23/2012 - 07:24 | 2729606 Ghordius
Ghordius's picture

Perhaps this is because I'm so old that I could be called a dinosaur, but the ECB "talk and walk" has, IMHO, reverted to the old way all (european) central banks talked and acted. Nowadays the younger generations are used to CB superstar glamour from FED's "Maestro" Greenspan and "Helicopter" Bernanke, but the "old interventionist school" of the european central banks (which are in many cases way older, btw) is perhaps still alive.

My two cents: Draghi has convinced the ECB Council - or more likely the other way round - to at least try to do it the "old (european) way": The market rules, long term. The market obeys the states's needs, short term.

Ergo IF some banks and/or hedgefunds organize a nice little churn-fees-and-bonuses-generating bear raid on a country, THEN they will get trounced by unlimited EUR firepower. IF the market behaves "rationally according to the political speed" by adjusting slowly, THEN it will be let in peace, because this ceases to be a monetary matter and the hot potato can be passed to politics.

Just remember that politically, europe wants to have the key rates back to the "sane" level between 4% and 8%. It's all that damn hot dollar money sloshing around looking for revenue to leverage ad nauseam that makes it impossible.

Thu, 08/23/2012 - 06:51 | 2729581 john_connor
john_connor's picture

blood in the water

Thu, 08/23/2012 - 07:17 | 2729603 stocktivity
stocktivity's picture

For sure....look at silver this morning. The blood is beginning to boil over.

Thu, 08/23/2012 - 06:56 | 2729582 Laretes
Laretes's picture

Wonder how long it would take HFT (or whatever) algos to figure out the 'secret' limits should they ever be put into place.

Thu, 08/23/2012 - 07:09 | 2729594 mendigo
mendigo's picture

I think the meaning behind secret is that they would claim to be supporting but would only act when they saw fit. In some cultures this talking with nothing to back it up is frowned upon. Apparently it works in the genteel world of eurocrat.

Thu, 08/23/2012 - 07:22 | 2729608 GMadScientist
GMadScientist's picture

It wlll end with the same result as attempting guile on a hungry wolf.


Thu, 08/23/2012 - 07:47 | 2729646 mendigo
mendigo's picture

problem is that algos are more easily manipulated than people and it seems the algos are what moves the markets. algos are more easily manipulated because they behave predictably and rapidly so there is feedback

Thu, 08/23/2012 - 07:23 | 2729609 magpie
magpie's picture

secret index / aapl caps

Thu, 08/23/2012 - 06:57 | 2729583 surf0766
surf0766's picture

Wait til they make them Special Secret ceilings.  That will work. They are leaders. They know the key words to say.

Thu, 08/23/2012 - 06:59 | 2729584 AlaricBalth
AlaricBalth's picture

Double secret probation! Europe is more messed up than the Delta Chi house. My solution...Toga! Toga! Toga !

Thu, 08/23/2012 - 06:59 | 2729585 LongSoupLine
Thu, 08/23/2012 - 07:15 | 2729602 AlaricBalth
AlaricBalth's picture

Looks like demented minds think alike.

Thu, 08/23/2012 - 09:01 | 2729851 LongSoupLine
LongSoupLine's picture

too funny!

Thu, 08/23/2012 - 07:00 | 2729586 asteroids
asteroids's picture

For us to get on with new growth, someone must go broke. This doesn't help. Notice another bullshit rumor Thurs./Fri. to levitate the market through the weekend? I bet this rumor gets shot down Monday.

Thu, 08/23/2012 - 07:01 | 2729587 falak pema
falak pema's picture

Will the PD monopoly Bots be in on the the question that comes to mind.

Squid run bots and squid run CBs have to talk SECRETS to each other or it won't work! 

Wow, secrets like CIA, NSA, Bin LAden secrets? 

We should name a KGB or CIA guy to head the very SECRET ECB!

Now we know, SuperMario is not only ex-GS he is also ex-CIA/KGB! 

Thu, 08/23/2012 - 07:24 | 2729612 magpie
magpie's picture

Don't worry, maybe Assange will leak them ?

Thu, 08/23/2012 - 08:12 | 2729703 falak pema
falak pema's picture

viva Ecuador! 

Thu, 08/23/2012 - 07:02 | 2729588 mendigo
mendigo's picture

Europe has become one of those kind of hypothetical cyber villiages in that game the kids play - is it sims I don't know.
The crazy thing is that its working for the cyber market.
I just need a little more virtual cash myself and I won't give a virtual shit.

Thu, 08/23/2012 - 07:03 | 2729590 vertexa
vertexa's picture

I think ECB is just trying to negotiate with Germany with a way to reduce cost of yield capping. things definitely not finalized yet.

Thu, 08/23/2012 - 07:08 | 2729591 northerngirl
northerngirl's picture

This is beyond insane. 

Thu, 08/23/2012 - 07:09 | 2729593 milanitaly
milanitaly's picture

Merkel is baaaaaaack!!!!

And she is working on behalf of Euro "status quo"

Politics is just a little bit more complicate than a comment about a financial chart.

Thu, 08/23/2012 - 07:10 | 2729596 fonzannoon
fonzannoon's picture

Euro still rallying. Incredible. Thats like the fed saying they may secretely do QE through repo's....


Thu, 08/23/2012 - 09:23 | 2729930 falak pema
Thu, 08/23/2012 - 07:14 | 2729597 rufusbird
rufusbird's picture

Oh My God! nothing is jucier or better than a secret...gimme more...

Thu, 08/23/2012 - 09:20 | 2729911 falak pema
falak pema's picture

you're confusing secret with secrete...the one is hidden potent word the other is hidden juicy flesh! 

Thu, 08/23/2012 - 07:13 | 2729598 Nachdenken
Nachdenken's picture

Yesterday Greek Prime Minister Samaras in an interview for the Sueddeutsche Zeitung personally guaranteed the 100 Billion Euro debt of Greece.

Draghi can guarantee ECB balances personally, and who cares about interest rates ?

Thu, 08/23/2012 - 07:21 | 2729607 magpie
magpie's picture

There is however only one higher level of escalation left: The teleprompter makes Obama say "It's time to buy Spanish bonds'

Thu, 08/23/2012 - 07:13 | 2729600 Sequitur
Sequitur's picture

"I never intended to break any rules."

- John Corzine

Thu, 08/23/2012 - 07:25 | 2729613 GMadScientist
GMadScientist's picture

"I never intended to break every bone in Mr Corzine's body"

Thu, 08/23/2012 - 07:27 | 2729617 Ghordius
Ghordius's picture

did he mention which europe? the UK or the eurozone?

Thu, 08/23/2012 - 07:23 | 2729611 No Euros please...
No Euros please we're British's picture

Someone important said that the EZ was saved already, but they're trying to keep it a secret.

Thu, 08/23/2012 - 07:26 | 2729616 GMadScientist
GMadScientist's picture

You misspelled impotent.

Thu, 08/23/2012 - 07:26 | 2729614 JackT
JackT's picture

Just knowing that these so-called options "may" or "may not" (instead of just "not") exist or even just the fact that things are so whacked-out that a rumor like this could be floated out there (likely just to see if it has any wings) should be enough to tank the markets.

But why doesn't it? Could it be the "guarantee" of QE?

Thu, 08/23/2012 - 07:30 | 2729619 magpie
magpie's picture

It actually inspires to dump until the secret is not revealed.

Thu, 08/23/2012 - 07:36 | 2729625 zx12r
zx12r's picture

I would just like to know, when does it ALL come crashing down worldwide? I mean the whole shebang. Any predictions?

Thu, 08/23/2012 - 07:40 | 2729630 jmcadg
jmcadg's picture

No no wait.

Let slip that there could be a secret ceiling that will only work if it is secret.

Then poo poo such a ridiculous idea, then (and this is the cunning part) ... have a secret ceiling.

Yes, double bluff. They'll never know!!!


Thu, 08/23/2012 - 07:41 | 2729632 ptoemmes
ptoemmes's picture

They ought to just STFU and do it - or something.

it'll then be sport to discover it and call them on it.

Thu, 08/23/2012 - 07:48 | 2729649 XitSam
XitSam's picture

What's the problem? Just run two sets of books. 

Thu, 08/23/2012 - 07:52 | 2729659 WaEver
WaEver's picture

the ecb will act  get over it and stop whining because your shorts are getting hurt

Thu, 08/23/2012 - 07:56 | 2729666 Apostate2
Apostate2's picture

In my misinformed and very humble opinion, this Mexican standoff between the National pols and the Euro-annointed-bureauros re the 'debt austerity vs spending debt' debacle simmers down (like the frogs in the pot)- rumours aside as in open secrets- that  the redline is simply: comply with the reforms to spending or no more dosh. Greece does the hard but realistic reforms or out they go. Message received by the other comrades in arms. Now, if independence and national self-determination is primis inter pares go for it. Get the best deal available from your erstwhile neighbors and get real with the reforms necessary to help your nation that is your people. 

Thu, 08/23/2012 - 08:02 | 2729682 Let The Wurlitz...
Let The Wurlitzer Play's picture

They cant make it to secret because the market might think that some idiot like John Corzine is buying istead of the ECB.  Does that make sense?

Thu, 08/23/2012 - 08:08 | 2729697 swiss chick
swiss chick's picture

sounds like helicopter ben euro style!!!!!!

Thu, 08/23/2012 - 08:12 | 2729699 Gavrikon
Gavrikon's picture

Angela Merkel was in tiny Moldova (the poorest country in Europe) yesterday for about 4 hours.  For the life of me, I cannot conceive of why that would be.  The country is split into a pro-Russia piece, and a pro-Romania/EU piece.  Its only two claims to fame are its wines (which are not in a whole lot of demand in the EU, now that you can get French stuff so cheaply), and that it is invariably trampled by whatever Army happens to be going through during an invasion.  It beggars belief to think that little Moldova has anything to offer the EU, except perhaps the control of its people to Brussels.

Fuck the EU!  Fuck the Eurotard bureaucrats who cling to power like a tick on a dog!  And most of all, FUCK THE (T)euro!

Thu, 08/23/2012 - 08:25 | 2729735 i-dog
i-dog's picture

    "FUCK THE (T)euro!"  ... LOL!

FYI, the EUrocrats want every little country from the Volga to the Sahara to join the EU/EZ. No matter how poor or insignificant you are, those selfless guys in Brussels just want to help you. They really, really care!

"We're from the EU, and we're here to help".

Thu, 08/23/2012 - 09:09 | 2729882 spanish inquisition
spanish inquisition's picture

My Tin Hat Conspiracy Theory alert! -

Something is afoot. I read something a year or so ago that I cannot locate to confirm. It was believe it was that (Nat?) Rothschild had a compound built or purchased in Moldova. If Merkel was "summoned", then something is coming soon. Lets say that she is having her "Ghadaffi" career choice moment?

That was My Tin Hat Conspiracy Theory Alert for August 23rd,2012.

Thu, 08/23/2012 - 08:15 | 2729708 spanish inquisition
spanish inquisition's picture

Wow, resorting to Fairy tales...Little Elves coming into the econmy and repairing it in secret overnight. The Elves and the Shoemaker

Of course this one ends differently. The material in his shop is gone, which he still owes the bank for and the next day a banker is wearing new shoes.

He complains to the Gov'ner that he nad the people have been foaming the runway for 5 years now and the people are paying the price of incompetent and criminal financial types. Under the NDAA he is held indefinitely under psychiatric watch and deemed a domestic terrorist under the Patriot Act. They now charge him for the time in custody and attach all his assets, because it's hard to house 10% of the population indefinitely.

Interestingly, the Government does not see a penny of his money, the banks have derivitives attached to the whole country and are first in line for any money.

Thu, 08/23/2012 - 08:18 | 2729718 Scalaris
Scalaris's picture



From Alphaville:

Spiegel Online leads with an update to its news story on Monday, according to which the interest rate threshold is likely to be top secret. The story said that a majority of central banks have rejected the idea of transparent interest rate caps. The article also quotes Wolfgang Schauble as saying that such a solution was problematic. This is why the next option down the line will be an unofficial version of the above.


Die Welt came out with a corroborating story this morning. It said the latest internal idea discussed in the ECB are secret interest rate targets, or alternatively spread targets, but there is also concern that these targets might be revealed (which is very likely to happen, considering that this story is also being revealed.)


Mark Schieritz, in his blog Herdentrieb, confirms that his sources have told him that there is no majority for such a radical plan. He said the operations department of the ECB, under Ulrich Bindseil, has made technical preparation, but this is just their job. They have done the same for the LTRO. Schieritz concludes that either the ECB leaked the story, in which case it was an own goal, or the Bundesbank leaked the story in order to build up sufficient opposition in Germany. He concludes that whatever is decided on Sep 6, is likely to disappoint.

Thu, 08/23/2012 - 08:35 | 2729769 spanish inquisition
spanish inquisition's picture

It's all coming out of German publications so it must be credible. Where are they going to print this stuff when no one believes the German press?

Thu, 08/23/2012 - 08:25 | 2729742 tradewithdave
tradewithdave's picture

"When it becomes serious... you have to lie." 

When it becomes super-serious... you have to make it into a secret so you can leak disinformation and game the systemically important.

When it becomes double-super-serious and beyond the point of no return... you have to replace SIFI with a game and turn it into a sport like Jumangi where you hunt down the answer... "Not good enough Sonny Jim!"



Thu, 08/23/2012 - 08:27 | 2729746 sbenard
sbenard's picture

It wouldn't even take a leak. Once the bond vigilantes figure out where that ceiling is, all hell would break loose!

Thu, 08/23/2012 - 08:35 | 2729771 Quinvarius
Quinvarius's picture

Print and lie is the new plan.  Same as the old plan.

Thu, 08/23/2012 - 08:39 | 2729783 Joshua_D
Joshua_D's picture

Y'all apparently  don't understand that secret means "doubleplus super top secret," which is very different than your average secret.

Thu, 08/23/2012 - 08:42 | 2729805 forwardho
forwardho's picture

So now it comes to this. After two years of bloviating techno-conomists injecting make believe capital into a known black hole, and then talking and promissing the E.U. will by necessty return to normal. Even they are now to embarrassed to put their own name to this rediculous lie. "without citing anyone" really. As noted by other ZH'ers posts, even this nonsense will cause a move in the market. Since all who have been given "the glimpes behind the curtain" know the final outcome of this farce we call a market, a great deal of money will be made. (like betting on the end of a bad movie when you have already suffered through the book) But to look beyond, is a truly frightening experiance. We stare into the abyss.

Thu, 08/23/2012 - 08:59 | 2729849 exartizo
exartizo's picture

Only Bureaucratic Idiots can actually think they can get away with fooling market forces forever.

Thu, 08/23/2012 - 09:08 | 2729878 AynRandFan
AynRandFan's picture

How is it a secret that the ECB does "whatever it takes" to keep Spanish interest rates below 7%?

Thu, 08/23/2012 - 09:45 | 2730008 optimator
optimator's picture

Next rumor?  Double Secret.

Thu, 08/23/2012 - 12:22 | 2730638 Dareconomics
Dareconomics's picture

Currently, there is coordinated action between the Fed and the ECB. The action is jawboning. August is a tough month for the markets due to low liquidity. In order to get through this sensitive time, the ECB and the Fed have been leaking information so that we could get through the month without a market panic. So far, it is working.

This month, whenever markets begin to soften, we get "leaks" from the ECB, Fed muckety-mucks dropping hints in speeches and interviews and an occasional Hilsenrath article.

Nothing has changed. The economy still has a huge labor problem, Europe is still insolvent and China is not growing as quickly as we would like.  The only thing keeping risk assets up is the promise of the next fix of cheap money whether it be in the form of QE from the Fed or bond buying from the ECB.

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