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Two Charts On Why The LTRO Is A 'Real' Failure
While financial and sovereign spreads in the most optically sensitive entities has rallied magnificently for the last few months – helped and extended by LTRO 1 and LTRO 2 – the weakness of the last week or so in both of these critical systemic risk indicators (Sovereign spreads in Spain and Italy and the LTRO Stigma that we noted earlier) should be worrisome for many of the leaders who are using market action as a corollary for their actions. What is most worrisome however is the absolute and utter lack of impact to the ‘real economy’ of Europe as PMIs have continued to slip and sentiment stumbles – nowhere is this more evident than in charts of Corporate Credit Demand and Corporate Credit Availability, which as Morgan Stanley notes today, suggest the deleveraging balance sheet recessionary impacts felt in Japan and the US are now writ large in European minds as minimizing debt dominates maximizing profits (or living standards). Demand for credit is sliding for both large and small firms and bank lending standards continue to tighten aggressively for both large and small firms. As austerity continues and credit contracts, it seems apparent that the much-hoped for shallow recession in Europe will be deeper and longer than most currently believe.
Demand from small firms for credit - just as we saw in the US - is lagging notably now. Large firms also are showing falling demand but at a shallower rate but with jobless rates so high already and the smaller firms (as in the US) as the engine of job creation, it seems problems are playing out in a similar path to the other deleveraging regions of the world...
And lending standards have only become tighter even as banks have supposedly been flodded with encumbered cash...
Source: Morgan Stanley
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Tyler, can you post the action of TVIX so we can jump all over Credit Suisse
LTRO worked for its true objective, which is QE3 under a different name.
So, what will QE4 be?
QE4 = WWIII
SUPER DUPER BULLISH on housing!
I'm calling a bottom.... just like when housing bottomed in 2009, and then again in 2010, 2011 and 2012
DOUBLE PLUS GOOD for banksters
Exactly. You can only label the LTRO program a failure if you believe that it was ever intended to do anything for the real economy. I don't think it was.
Insofar as LTRO has postponed the (then imminent) implosion of the Eurozone banking system, it has been quite successful.
'Banker Bailout Succeeds In Bailing Out Bankers.' would be a more accurate headline.
yes. LTRO was insofar politically more palatable since it does help all banks, not only the big ones next to the "fount of riches". this "spreads" the goodies also to the smaller banks lending directly to the small and medium businesses - which then keeps operating costs lending rates lower for them.
seen this was, it's a "superior" instrument that seems so far to have a "mercantilist" effect (as the Tylers are growing fond of this word) effect of keeping production costs lower - of course only for a while since all monetary effects dissipate after a while...
but I disagree - the (then imminent) implosion of the eurozone banking system can be prevented ad infinitum and ad nauseam since it "just" charges/consumes the currency - and we still don't know how much and how fast, it could be much less and slower than a straight QE due to the "mercantilist effect"...
my neighbor's aunt makes $67 hourly on the laptop. She has been fired from work for ten months but last month her check was $20142 just working on the laptop for a few hours. Here's the site to read more .... http://lazycash9.com
Japanese Fetish porn paying the bills.
Does she make her money by trolling websites and posting about how much money she makes doing so?
No, she is in her 20s and has a Web Cam connected to her shower and takes lots of showers during the day!
67? poor bitch
"A bank is a place where they lend you an umbrella in fair weather and ask for it back again when it begins to rain." - Robert Frost
Looks like the Banks are expecting rain...
Wow, best comment ever! Thanks!
And as all bankers know:
"A rolling loan carries no loss"
"'tis better to have loaned and lost than never to have loaned at all"
"'tis better to have loaned and lost than never to have loaned at all"*
*Applies only to TBTF banks
OT: anyone know why 3x short R2k (SRTY) did 6 million volume in th first 30 minutes this morning? pretty much off the chart if it's for real.
Treasury sells TIPS at negative yield!
TIPS are a guaranteed way to loose money outside of a tax sheltered account. Imagine that if inflation is 20% and TIPS pay you 20%, you will have to pay ~35% in Federal Tax on the 20%. Thus you will get only 13%. Or you lost 7% of your money!!! And guaranteed!
Until next time,
Engineer
You have just discovered the real reason governments LOVE inflation. The folks think in nominal "hey I'm rich" but pay taxes on the inflated...in the end they loose purchasing power...."and not one man in a million can see it"....Keynes
Gee all the free fake money printing bullshit doesnt actually fix anything but really just makes things far worse? Who would have guessed that? OH WAIT, anyone with a BIT of sense outside the Neandersheeple herd which is about to get slaughtered yet again.
LTRO is a tremendous success to them because it delayed the enivitable breakup of a hoplessly broken union and allows all those useless bureaucrats to continue to draw a paycheck. I see it all the time - zombie companies that everyone knows will fail, but TPTB keep them afloat so they can drain a few more paychecks out of them.
Now instead of Zombie companies, we have created zombie governments.
Zombie countries, like Greece.
On a more optimistic note. There's a firesale bargain in TVIX today as the uprecedented historic volume purchases last month are being sold today. Although the price has not hit my target of $10.25, $12 may not be a bad entry point.
Trying to "fix" REAL problems with more paper is destined to fail. Despite all the cheerleading and hubris, shit didn't turn into gold.
And note euro-Gollum, who cheered last week that "the crisis is over" is on the wires today saying this (and proving he's truly and deeply the REAL muppet):
03-22 13:48: EU's Van Rompuy says too early to call it post-crisis period
<------( recession
<------( depression
<------( same shit different stink
<------( same shit same stink
His name was Robert Paulsonopoulous....
His name was Robert Paulsonopoulous....
His name was Robert Paulsonopoulous....