Santelli And Grant Explain The ECB Reality

Tyler Durden's picture

While illiquid short-dated Spanish bond yields plunge and short-sale-banned Spanish stocks (IBEX) surge back above their 200DMA the most in 16 months, one could be forgiven for falling into the age-old CNBC-trap of "well the market is up so it must be good" belief. Rick Santelli and Mark Grant, in a brief few minutes attempt to get below the surface of the actual words and perception of today's Draghi statement and explain just how the conditionality and size/roll constraints make this supposed unlimited "we'll fix it all" scenario rather ridiculous in that "The ECB is never going to be allowed to do anything." Perhaps just as IBEX fell 17% in 3 weeks after rallying 5.6% on EUR Summit-day hope, we will see some sense of reality sink back in to the circularity of this support.

We have seen this kind of head-fake move before in the extremely high-beta and financially-exposed IBEX a few times...


Perhaps its worth a pause to reflect... Rick and Mark begin around 4:20 - folowing Simon Hobbs exultation of the awesomeness of Draghi...


and from Mark Grant, author of Out of the Box,

The ECB & Conditionality


The markets may rally today, yields may fall as the ECB pulled out the BIG words, “without limit” and “no cap.” This is the focus of the market and it is a very wrong focus. The entire ECB scheme is dependent on conditionality and this is the key to all of the hype!


Any action by the ECB will be telegraphed well in advance because of it; if anything happens at all. The ECB has now said that it will do nothing, not anything, without a country applying for assistance and without the agreement of the Stabilization Funds which means that the EU and perhaps the IMF will have to agree. To accept any application from a country then that nation will be audited as part of the process. Bear in mind that now when a country submits its numbers to Eurostat or to the Bank for International Settlements that no one, no fiscal oversight commission, audits the books and records of a nation in Europe. This is true for the sovereign and this is true for the banks domiciled in a country. The audits that have been conducted have all been for the troubled nations that have lined-up for aid. In each case, every case, with Greece being the most notable example the numbers have not been as presented. This was true for Greece, Ireland and Portugal.


So the ECB disavows the bond buying for Portugal, Ireland and Greece and the focus is upon who is coming next which is really Spain and Italy. Spain, by their own tacit admission, uses “dynamic provisioning” as part of their economic policy. They stick to this on the basis of manipulating their reserves in good times and bad times and there is quite an academic argument appended to this notion but what cannot be denied is that it all gets down to fiddling with their books. Consequently it is a good assumption based upon sound logic that their books, the balance sheet for the country and their banks, are not as presented or thought. This is one reason, in my view, why Spain does not want a full bailout because it would mean that the sovereign and the Spanish banks would be subject to an audit and that certain discrepancies would have to be accounted for in front of God and their brethren.


Next we have hard evidence that the EU may not approve any such assistance programs. The Prime Minister of the Netherlands has said “No more money for Greece” while the Finance Minister of Austria has stated quite clearly that Austria has had enough and that Austria will not be giving anymore of her citizen’s money to any other country in Europe. I think both statements are clear enough.


Consequently all of the ECB hype, jargon and fluff have no value if the EU won’t approve any of the aid programs. It is all just rhetoric floating around in the air. Even if the EU approved some program for Spain or Italy it would take months and the ECB has specifically said that they will not act, not buy any bonds, without the approval of the Stabilization Funds. The ECB scheme is cleverly designed and it reminds me of the second round of the European bank stress tests where the methodology was really fraudulent and hid the actuality as Dexia, Bankia and several Austrian banks have gone bust since then after we were assured, in the strongest of terms, that they were safe. The ECB has spoken and promised to buy “without limit” but since it is dependent on an European Union where several nations do not wish to fund I find our current rallies dependent upon an assumption that is faulty and perhaps dangerously faulty in its basis.
That is where I stand!

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diogeneslaertius's picture

clearly simon hobbs is enjoying a mouthful of satan cock

(the chart is very sexy though) sort of hard to keep a con game going when someone is up-ending the three card monty table every single day XD

smlbizman's picture

you know, i could believe it more if they told me they found the leprechauns gold, or that goose that lays golden eggs, or at least some fucking magic beans....

rocker's picture

The only problem I have with Santelli is that he was vacant during the Bush Hank Paulson bailout for his bankster buddies.

He was also vacant when we were losing over 500,000 jobs a month.  Why Now.

He is just another paid pimp who hopes his job and CME doesn't look like the NMR's new trading floor.  Gone and empty.

fourchan's picture

i want to see him shit bricks when this whole joke of a market comes down.

diogeneslaertius's picture

it will be entertaining to watch the psychological glue dissolve

dmger14's picture


More applicable today than when written.

diogeneslaertius's picture

so i guess the chart isnt sextacular :(

perhaps its merely a Sex Knight

slewie the pi-rat's picture

hey, diogenes!  great cumment! 

slewienomics has published extensively on this question

my last incomrehensible-to-many "insane diatribe" broke down the decision-making "tree" under muddling through which slewienomics has defined as :>  disjointed incrementalism, which is simply what i was "taught" by a political philosopher of highest degree

at that time i pointed out that the "disjointed" may be coming to an end and why and that the "deciding" may change, one way or another

grant is correct;  it ain't in the bag, but marioECB & the finiMinis do seem to be involved in working out a situ where the ECB can do "central bankstering" more freely, politically

this may involve "sovereignty" issues;  i can't see how it doesn't, and those issues may be most important to germany here, since it has been the "source" for much of the ongoing piigs financing and the "accountingII" for the slush fund is getting enormous on the blunderbank's bal sheet, according to recent zH chart porn re CBs and their turbo-presses

my point has been that the pols' disjointed, one-by-one approach is nearing its end, rationally :>  the pols can no longer ignore the "next one" and therefore disjointedness is now kaput which means, definitionally mind you, that muddling thru is over or very nearly over

this is what marioECB has been trying to engineer a politically-acceptable solution to, btw, since the last goldilockCrisisTM summit, when angela said to go ahead and print a bit more while we germans caucus and get national or international, and her face appeared on the kicked soccer ball in the italian (?) press

the politicians and banksters are calling the shots;  politically, anything can happen here, or so it seems

but no one has shot "cockRobin" yet right?  the EU and EZ membership is stable; how? no one can understand completely;  baffling bullshit everywhere

so now the politicians and their nations will decide whether to proceed with a new "more federal EU/EZ" or just shit-can the whole fuking joke because it is just a banksters' paradise and a debt trap for thePeople and their 'nations'

as a race, we are capable of learning from our mistakes, often while we are still making them

this is "europa's" decision, not mine

in that regard, the german path will be critical :> if the question is put to a popular vote, what will be the EXACT question on that ballot?

and how can the internationalists keep this popular vote from happening?

or :> is it the legal requirement at this point, no matter what anyone does, the german people get to say what the future is for their families and children and whether they want bruxelles running their currency and their bank balance sheet for much longer?

stay tooned!

slewie the pi-rat's picture

and yep!  i realize that whatever they do may simply be a "new inproved" game of muddling through;  it seems to slewie that at BEST they will be in a similar situ to the US and we are on thin ice in many respects fiscally AND macro-economically, BiCheZ!

so we are "begging the question" of whether there MUST be a liquidation, or not;  still;  and if/how/how long the pols&banksters can stave it off

tyler knows this is the bottom line and we all should know it, also, b/c it is the true economic question of today

keeping the checks in the mail may become quite the daunting task v. soon as anyone can tell who no longer sees things as "disjointed"

so there's the "bottom line" aspect to this whole zombie-ponzi jamboreee... well as the little daily "successes and failures" and the day-to-day predictions of the doom we so richly deserve

Buck Johnson's picture

It's all a shellgame and they know it.  This pop was even talked about on CNBC later on when one of the traders said that many in the market doesn't trust this rally at all.

Cult_of_Reason's picture

They (Primary Dealers) always mark up markets when eurocrats make any announcements.

Draghi could just say, "I am a bumblebee" and they would still mark up the markets.

These mark-ups coinciding with the announcements are pre-arranged between the eurocrats and PDs (as Rehm said this morning, "to help restore investor confidence") and the actual announcement does not matter (nothing was announced today that changes anything, absolutely nothing).


LawsofPhysics's picture

doesn't the Fed have some repos to do?

Cognitive Dissonance's picture

"The ECB is never going to be allowed to do anything."

As long as Draghi gives the junkie a good aural fix nothing needs to actually be "done". That will not be enough when the fiat DT's finally set in.

But for now go long verbal persuasion.

diogeneslaertius's picture

who needs an actual market when youve got unadulterated hopium glycol on tap 24/7

I am Jack's Induced Perception of Reality

El Viejo's picture

"I reject your reality and insert my own." Mythbusters

Cognitive Dissonance's picture

Classic. Gotta fire that one up again this weekend.

Peter Venkman: Well, you can believe Mr. Pecker...
Walter Peck: My name is "Peck."
Venkman: Or you can accept the fact that this city is headed for a disaster of biblical proportions.
Mayor: What do you mean, "biblical"?
Ray Stantz: What he means is Old Testament, Mr. Mayor, real wrath-of-God type stuff!
Venkman: Exactly.
Stanz: Fire and brimstone coming down from the sky! Rivers and seas boiling!
Spengler: Forty years of darkness! Earthquakes, volcanoes!
Winston Zeddmore: The dead rising from the grave!
Venkman: Human sacrifice! Dogs and cats, living together! Mass hysteria!
Mayor: Enough! I get the point! And what if you're wrong?
Venkman: If we're wrong, then nothing happens. We go to jail, peacefully, quietly. We'll enjoy it. But if we're right, and we can stop this thing... Lenny, you will have saved the lives of millions of registered voters.
Dr. Richard Head's picture

I want to do a remake called BondBusters.

Stanz: Which way do these rates go?

Venkman: They go up!

"When there's interest rate that sound too good.  Who you gonna call? Bond Busters. An invisible bond with austerity.  AHhhhhh! Who you gonna call? Bond Busters.

Xibalba's picture

I bet ZH gets more clicks on this piece than Cnbs has viewers.  

Meesohaawnee's picture

i can only hope. Fuck CNBS and all the msm (yahoo finance) hoes bags who take a dildo up their ass every day to get a pay check. pathetic. these people are dispicable.

WaEver's picture

So basically these guys were completely wrong but they still can spread their BS. Of course they are not wrong only question of timing.....

A Man without Qualities's picture

This Simob Hobbs guy looks like he would say absolutely anything if you paid him...

Temporalist's picture

For proof of that watch some clips of Hobbs when he first got to CNBS if you can stomach it.  He was coached after his "gaffes" when he thought telling the truth was part of being a CNBS "journalist."

diogeneslaertius's picture

in an unrelated story Rick Santelli fell down a flight of stairs and then shot himself in the back of the head 3 times at close range with a suppressed rifle

and one could believe it, if one were so inclined, that this was a freak accident induced by abusing hopium

but that would be like planting a pound of coke on Elliott Ness

in austerity veritas man - I keep waiting for a guy like rick to lose his shit entirely andgo beyond the occasional rant

Cognitive Dissonance's picture

No disrespect to Santelli intended but...........consider him controlled opposition. As long as he is "allowed" to speak against the machine many will be convinced there is still a "right" to do so.

They (the PTB) hate our freedom(s) folks. And they are taking them away on a daily basis, then convincing you and I that we still posses them.

Go long physical (freedom) folks.'re gonna have to want it first.

diogeneslaertius's picture

controlled opposition, absolutely

he is a like a pet or something, hence my "a dude like this"

at some point he will lose his shit and go otally off script, as the stockholm syndrom crescendo kicks in :) ?



(even if they can keep the congame going indefinitely with infinimoney) the procedural impacts are real and its possible to get out of the game

diogeneslaertius's picture

CNBC i thought it was implict these are kept stooges:)

but it all shows the tenuousness of it...


diogeneslaertius's picture

i dont see any problem in direspecting Santell, max keiser he aint

Cognitive Dissonance's picture

I was referring to his genuine sincerity. Just because someone really truly is sincere doesn't make them any more effective. However it does often make them blind to being a patsy or tool.

The absolute best controlled opposition is one that doesn't know they are controlled. The way I see it Santelli's problem (shared by the vast majority in the financial field of which I am a part) is that he honestly believes in the system itself and feels that it has been hijacked and corrupted. In other words, just remove the cancerous tissue and the body will be fine.

Sorry Rick........but the system can never be cancer free. The system IS the cancer.

Dr. Engali's picture

You sound as disillusioned as I have become. There was a time when I enjoyed this industry until I began to see it for what it is. Now I half want to see it burned to the ground,but at the same time I don't want to see good people get hurt.

Cognitive Dissonance's picture

Just resigned to the fact that the only thing I can change is me. Everyone else is on their own.

The toughest part about change is giving up on changing the past and moving on to the here and now.

ThunderingTurd's picture

+25 For the second half of your post.  Well put indeed.

BeetleBailey's picture

well said Dr....and Cog as well,,,,,excellent thoughts that mirror my own. Couldn't have stated it better.

Santelli is exactly what you say Cog....and his angst shows through...the most passionate man that tries to tell the truth, and it is my belief CNBULLSHITC keeps him as he's jumped the shark, and too many would tune out if he got the boot....

They'd have to go Mandy Drury topless all morning to keep the (smart) viewers if they lost Santelli....because then they would be left with guest spots of Hugh Hendry and other truth tellers that don't have Santellis' wide arm posing, genuinely enthusatic contrarian (and correct) view...

Cognitive Dissonance's picture

From the CIA field agent manual.

First you ignore the truth, then you deride the truth, then you co-opt the truth, then you create the truth. Repeat as often as needed until End of Empire. Switch uniforms and start again.

new game's picture

excellent excellent; responsible for the effort, but not the outcome.

and, i having been kicked out on the street as a RE broker, still lament over the whole travesty.

thanks, time to move on...

PM"s is all i do anymore.

BlackholeDivestment's picture


...bruising your heel upon your own ass is a symptom called MAS, ''mark accepted syndrome''.

It is a symptom of a grave and deadly virus called GIT, ''given into temptation''.

The symptoms can be treated with a constant (motion) reaction to one dose of medicine, confirmed by RIM ''Revelation In Mercy'' manifestation.

RIM is the cost prohibited drug based derivative. Major side affect, (Warning) known as PSPRPV ''perfect sustaining principle return perception vision'', which leads to comfirmation in and among the (global) general public (population) captured in the Crossheir by ''MAS GIT RIM''.

PSPRPV confirmation symptom is known as MASPD ''mark accepted public distress''.

This is an easy virus for trained Doctors to spot, if they have accepted the new (fulfilled) prescription testimony and been given (prophetic/retroactive) immunity.

The bitter pill, (known as ''Doctors Office'' ) OFIC ''Our Father in Christ'', must be given (cost prohibited) free of charge, and accepted in agreement, before public divesting (taking the Red Pill) from the black hole. 

WARNING: OFIC is the RED PILL. Do not be confused. 

2012 Update: A new warning label is out:  

Doctor's Office can only be given to POWs subject to death.

Under Rosemary's Baby, the Red Pill (OFIC) will result in consentration camps for all Doctors and Executive Execution for all flesh, without cause. Doctors are hereby advised to divest from the black hole, stand fast, and do no harm.

ekm's picture

The more I read the more I am convinced that this is a HUGE VICTORY for Germany.

ECB voting for it and Weidmann voting against is absolutely huge for Merkel. No blame.

Whether they approve the bond buying or not is basically not very important, if anyone knows how europeans operate. What matters is the ECB will take the blame, period.

diogeneslaertius's picture

What matters is the ECB will take the blame, period.


chain of custody two-step

no real news of course but we can always pulse trade the dynamics

piceridu's picture

17 overweight guests at the buffet table voting on who gets the bill...isn't democracy grand?

ekm's picture

The one who voted against is not forced to pay. The whole point of it is:

The ones who voted for it, let them pay for it. There are many, many ways NOT to pay, for Germany.

geewhiz190's picture

if this analysis is correct, the dollar is a great buy right here.

timbo_em's picture

That CNBC guy at the beginning surely got some of that EURphoria. I wonder how many sticky pictures of the Bernank and the Draghi he has at home under his bed.

kaiten's picture

Mark Grant? The europhobe? That´s going to be unbiased, for sure.

Dr. Richard Head's picture

Something else besides comments will also start at 420.

BORT's picture

How about an uupdate on how your most hated, or most shorted stocks from yesterday.  Any shorts left alive