This page has been archived and commenting is disabled.

Video Explanation Of The D(r)exia Bail Out

Tyler Durden's picture


Confused who ends up footing the bill for D(r)exia's bailout? Don't be: courtesy of INETeconomics, we have this brief and succinct video explanation, which confirms, as if there was any doubt, that the final invoice will either land in the hands of Europe's involuntary taxpayer "rescue rangers" via the ECB, or its involuntary and very much levered taxpayer "rescue rangers", via the EFSF, assuming the now priced in 3.0 iteration ever takes off (and Slovakia does not slam the door on EFSF 2.0 tomorrow). 


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 10/10/2011 - 13:09 | 1758032 abugarance
abugarance's picture

all positive for the zeuro of course

Mon, 10/10/2011 - 13:39 | 1758123 steve3828
steve3828's picture

When he was writing "+equity" under EFSF, I could have sworn he was writing "tequila" until the last letter. 

Tue, 10/11/2011 - 03:15 | 1760284 Harlequin001
Harlequin001's picture

I was nearly asleep. B.O.R.I.N.G.

Put some inflection in your voice man, that was painful.

Mon, 10/10/2011 - 13:45 | 1758177 LeonardoFibonacci
LeonardoFibonacci's picture

too much doomsday brings great disappointment on this board, especially today!

Mon, 10/10/2011 - 13:10 | 1758037 Deadpool
Deadpool's picture

ooops. error in reporting. US Fed is #1 creditor to Dexia as it was #1 borrower from Fed in '08 bail out orgy.

Mon, 10/10/2011 - 13:17 | 1758060 zorba THE GREEK
zorba THE GREEK's picture

All toxic assets of banks will eventually end up on balance sheets of central banks.

In the end, the taxpayer will shoulder the burden and the bankers will continue to

collect their hefty bonuses for making bad investments. Parents don't let your

children grow up to be bankers.

Mon, 10/10/2011 - 13:23 | 1758078 legal eagle
legal eagle's picture

Agree with everything you wrote except for the conclusion.  Isn't the lesson here that bankers win in any event, isn't that what you would want for your children?

Finance MBAs for everyone!


Mon, 10/10/2011 - 13:25 | 1758095 zorba THE GREEK
zorba THE GREEK's picture

Bankers are soulless parasites. That is not what I want my children to be, wealth or no.

Mon, 10/10/2011 - 13:24 | 1758089 101 years and c...
101 years and counting's picture

"Parents don't let your children grow up to be bankers."

Are you kidding?  I will encourage it as much as possible.  Just wish I went that route.  Getting paid bonuses depending on how much taxpayer money you can steal is a great career.



Mon, 10/10/2011 - 13:30 | 1758110 traderjoe
traderjoe's picture

You will teach your kids to be immoral, soul-less parasites that feed upon the misery of others?


Mon, 10/10/2011 - 14:02 | 1758280 legal eagle
legal eagle's picture

WAY TOO CATEGORICAL, I know plenty of bankers who do not fit into that simplistic paradigm, just none at the very top.  Like every profession, some are souless, some not, they are not defined by their profession.  Some do great things and do great works in the community.  It may be the exception, but being a banker does not seal your fate one way or the other. 

Wall Street does "expect" bonuses to be decreased GOING FORWARD according to this article

Mon, 10/10/2011 - 13:18 | 1758063 oh_bama
oh_bama's picture






Mon, 10/10/2011 - 13:21 | 1758074 bnbdnb
bnbdnb's picture

FAS is going quite well.

Mon, 10/10/2011 - 13:40 | 1758153 TradingJoe
TradingJoe's picture

Bubba, in order for FAS to go "quite well" it needs to pass $12 which is a huge resistance level! What I also saw today so far is SELLING in the XLF the FIN ETF! Beware of your FAS!

Mon, 10/10/2011 - 13:43 | 1758165 bnbdnb
bnbdnb's picture

Definately, I close it out daily, and will close if loses more than 2% from this position.

Mon, 10/10/2011 - 13:23 | 1758088 BeerGoggles
BeerGoggles's picture

It was a pretty obvious BTFD. ZH calls bear market and that marked the bottom.

Mon, 10/10/2011 - 13:24 | 1758090 SheepDog-One
SheepDog-One's picture

Fuck you and your dip, soon-to-be bagholder!

Mon, 10/10/2011 - 13:32 | 1758126 firstdivision
firstdivision's picture

So now you're here to try to convince people to buy here at the the last five times.  Harry, is that you?

Mon, 10/10/2011 - 13:26 | 1758100 SwingForce
SwingForce's picture

Is this like Direxion? 

Mon, 10/10/2011 - 13:48 | 1758191 Manthong
Manthong's picture

I think he meant Dregsia.

Mon, 10/10/2011 - 13:29 | 1758107 Lord Welligton
Lord Welligton's picture

And the EFSF makes losses on its asset (the equity it holds in Drexia) .......

So its bonds have, say, half their value .........

And ..........

The ECB is left holding the baby unless taxes are raised to make up for the loss.


BUT ..........

What if the ECB just says, under its new mandate, fuck it

"We'll just keep the bonds at par"

That means that investors have been paid off by the creation of money from thin air.

And not one thing has happened to the banking structure that created the mess.




Mon, 10/10/2011 - 13:29 | 1758109 Two Towers AU AG
Two Towers AU AG's picture

Tyler Durden   where is that anonymous hacker group.. NYSE is still around...  and markets are going up... what else can one do to make this life interesting..

I know what we can do...

 Tyler Durden for PRESIDENT 2012

Mon, 10/10/2011 - 13:44 | 1758169 SheepDog-One
SheepDog-One's picture

OK I guess I'll explain it again, last week I posted links proving this 'take down the NYSE' was fake, and further the date for it was not today but 11 11 11 at 3:15.

Mon, 10/10/2011 - 22:24 | 1759727 Mr. Mandelbrot
Mr. Mandelbrot's picture

Brad Pitt "playing" Tyler Durden would have a shot since most Americans are such idiots . . .

Mon, 10/10/2011 - 13:31 | 1758121 firstdivision
firstdivision's picture

Just an FYI, but what has happened the past 5 times we reached these levels on rumors, hope, lunacy?  Hold your balls for the drop, it's coming soon.

Mon, 10/10/2011 - 13:33 | 1758128 Deadpool
Deadpool's picture

Hank "the Yank" Paulson showed the world how to bail out ones friends in finance...create urgency by claiming the sky is falling and that the world will end without bank bailouts and counter parties will be make whole. Goldman/AIG in his case; Dexia/US Fed in this case. August gold and currency market wash-out created exactly that ideal situation for Belgium to panic and bailout the bankers. The poor smelly fools in NY and SF holding up signs have no chance against this extortion. May as well hold up candles in the wind. Today is just the most recent. there will be many more.

Mon, 10/10/2011 - 13:33 | 1758129 Belarus
Belarus's picture

It's all the opposite: because of Dexia, because Greece is weeks away from having no money to pay its bills, because no Europsean banks trust one another, and the EZ without massive intervention, per the IMF avisor as shown here on ZH, was only weeks away from a complete implosion.....what everyone seems to be missing is that Mekel and Sarkozy did in fact come up with an agreement. Whay would you do? Seriously, implode right now or kick the can? What does anyone really think their choice will/was going to be?

What just happened here is Europe just annouced their own version of QE. So we've got Britain doing QE, China now in the QE game, Japan has been there, and now all of Europe. This means the market is way ahead of all you: the U.S. will have to unleash one yet again soon: as somehow/someway U.S. debts need to get monetized.

In other words, what almost every commentor I've read is missing is this: we have entered a global hyper-inflation. period. The rest is all noise now.

Mon, 10/10/2011 - 13:35 | 1758136 Deadpool
Deadpool's picture

I think we've  been saying that for 2 years. maybe you are the one just catching on. Gold and silver. ring a bell?

Mon, 10/10/2011 - 13:36 | 1758140 Belarus
Belarus's picture

Then answer this million dollar question Deadpool: why is everyone so surprised by equities ripping higher?

Mon, 10/10/2011 - 13:41 | 1758146 SheepDog-One
SheepDog-One's picture

USD down -1.3%, just knee jerk, and hardly keeping even with currency big deal.

Mon, 10/10/2011 - 13:45 | 1758176 Belarus
Belarus's picture

Where I whole-heartedly and respectfully disagree with you sheepdog is that Europe does have a plan; it' called the printing press. Let me ask you a serious question that illicits a serious response?

With Europe indeed weeks away from imploding, what do you think Merkel and Sarkozy would agree to? Death now? Or Death later? 

What you're missing is as of right now every major developed country is entering into their own QE's if they're not already there. 

Which is why stocks will rip Zimbabwe style for ahile. 

Mon, 10/10/2011 - 13:50 | 1758201 SheepDog-One
SheepDog-One's picture

'Printing press'? LOL totaly WORTHLESS! You actually believe in this money out of thin air baloney and are now all-in long on global Zimbabwe? Wow I feel sorry for you dude, youve swalowed the 'tard pill huh?

Mon, 10/10/2011 - 13:54 | 1758235 Belarus
Belarus's picture

Jeesh...sheepdog, you're a bit emotional today? Didn't you read the part where i said "don't shoot the messanger." Yeah, that's it fulltard, I fully support the printing press. Chill dude, and actually read and intrepret what I'm saying here. 

I"M NOT THE ONE TURNING ON THE PRINTING PRESS, I'm just telling you that's what you're missing. You missed it, clealry: Europe basically just announced they are gonna print ( and no I don't think that is cool!). Holy cow, dude, get off your fucking rocker and listen every now and then.

Mon, 10/10/2011 - 13:58 | 1758250 SheepDog-One
SheepDog-One's picture

I dont care if you think its 'cool', it wont work, and has a halflife of about 1 day now. Anyone who actually believes this crap that Europe is about to print $6 trillion Euros out of thin air deserves what happens.

Mon, 10/10/2011 - 14:03 | 1758283 Belarus
Belarus's picture

That was eloquent and deep. Of course printing money doesn't work, who ever said it did? It's just desperation that pushes default out is all. But history is full of this destiny that politicians choose time after time after time. 

Mon, 10/10/2011 - 13:55 | 1758239 jdelano
jdelano's picture


Mon, 10/10/2011 - 13:40 | 1758154 Deadpool
Deadpool's picture

OK.....massive short on Friday just got burned. Happens hourly. "Everyone" is a generalization. I'm not surprised (bond market closed so stocks and currency get the action--stocks smaller market then bonds).

Stocks and currency can bounce. Nothing goes straight down (except whisky, which I like). If you think today's action is a trend extend your charts a year.  See? not even a blip.

Mon, 10/10/2011 - 13:48 | 1758161 SheepDog-One
SheepDog-One's picture

'We have just entered global hyper-inflation'....really? How do the global broke and jobless pay far higher prices for anything?

Mon, 10/10/2011 - 13:48 | 1758192 Belarus
Belarus's picture

They don't, sheepdog. That is the simple anwer. I'm no condoning any of this shit--don't shoot the messanger. All I am saying is everyone seems to be missing the point. Europe just chose to print per Merkozy's agreeement. that is all.

Mon, 10/10/2011 - 13:51 | 1758212 SheepDog-One
SheepDog-One's picture

You cant have hyper inflation when everyone is broke. Simple as that, that is all.

Mon, 10/10/2011 - 14:21 | 1758350 MeanReversion
MeanReversion's picture

The people of Zimbabwe and those that lived through Weimar Germany would emphatically disagree with you.

Mon, 10/10/2011 - 13:53 | 1758228 Deadpool
Deadpool's picture

Hey, B-roo! we get your point. Print to infinity amongst all central banks. No shit. Think Gold is at $1600 because it's a momentum play like NFLX? you just woke up so stop embarrassing yourself publicly with your enlightenment.

Mon, 10/10/2011 - 15:00 | 1758537 plantigrade
plantigrade's picture

Europeans are just three years behind the curve, including on the inflation consequences of printing. They learn forcibly by trying, not by using the prevision capacities of the human mind.

There is no European consensus for printing 6 billions with the accompanying crack-up inflation, but there are many desperate oscillations.


Mon, 10/10/2011 - 13:46 | 1758179 SheepDog-One
SheepDog-One's picture

Most everyone has now 'tarded themselves, Deadpool.

Mon, 10/10/2011 - 13:50 | 1758208 Deadpool
Deadpool's picture

when will I ever learn? I guess the Simon Black messiah complex in me can't help myself from trying to shine the light, but some can be lead to water but that doesn't make them think, now does it...

Mon, 10/10/2011 - 13:54 | 1758232 SheepDog-One
SheepDog-One's picture

'Equities ripping higher' yea while dolladolla bill rips lower....go ahead call it a trend and buy it all you like who cares?

Mon, 10/10/2011 - 14:02 | 1758227 jdelano
jdelano's picture

um no.  just no.  Merkel and Sarkozy announced that they agree that they should plan to come up with a plan to plan the planning of a QE plan planning.  Just like when they announced the plan to plan the planning of a levered Efsf.  They still have that same little pesky problem of rhetoric versus praxis, which is deeply confounded by the immense scale of the problem and the fact that at present, they don't have remotely the kind of authority or autonomy needed to train a 'bazooka' on the situation.  It's a testament to the naivete of the average bull that you accept the oft-repeated statement "We are working to fix the problem now,  we promise" as ironclad proof that the problem has been fixed.    


ultimately I think you'll be right, but you're early.  Still have to put in the lows, folks.  S&P 950 at minimum, period.      

Mon, 10/10/2011 - 13:36 | 1758138 narnia
narnia's picture

the point of the EFSF is that other Central Banks or crazy investors outside of the ECB will be able to buy its bonds. otherwise, the ECB could just take an equity position in Dexia for the amount of the investor bailout & be done with it.

Mon, 10/10/2011 - 13:43 | 1758166 TradingJoe
TradingJoe's picture

Am preparing for the GRAND FINALE, Beer, PopCorn, GirlFriend, Ammo, get it right?!? (Gold!):))

Mon, 10/10/2011 - 13:51 | 1758219 falak pema
falak pema's picture

make you a bet : while you drink the beer and pop the corn your GF runs off with the gold!

Mon, 10/10/2011 - 13:55 | 1758241 SheepDog-One
SheepDog-One's picture

She's not strong enough.

Mon, 10/10/2011 - 14:24 | 1758358 Bruin4
Bruin4's picture

No, but her other boyfriends are

Mon, 10/10/2011 - 13:59 | 1758265 Deadpool
Deadpool's picture

or use the guns and ammo on him first.

Mon, 10/10/2011 - 13:48 | 1758193 marcusfenix
marcusfenix's picture

this was from an artical in the WSJ today-

LONDON—Turmoil continued in the European banking sector as solutions to the region's banking and bond crisis remained uncertain despite Germany and France's pledge to come up with a "comprehensive package" of measures by the end of the month.

Analysts said such a package, while long overdue, is unlikely to fully address concerns about the longer-term future of the European Union and the fiscal health of its members. They warned that bank investors are likely to end up worse off, though the broader financial markets might receive a much-needed boost as investor confidence recovers...

 so, this rally is much like a straw house built on sand, sitting on a beach right in the path of a cat 5 hurricane that is about to make landfall, that sound about right?

this whole situation keeps getting more surreal as every minute of the day passes.

as Robin Williams once said "I have gone to far into the land of strangeness"... 


Mon, 10/10/2011 - 14:08 | 1758298 SheepDog-One
SheepDog-One's picture

Yep, grass house on a beach as the Cat 5 hurricane is approaching and all marvel at the structures obvious great strength and stability, because the opposite would be 'bad news' and we cant have that!

Mon, 10/10/2011 - 13:49 | 1758200 falak pema
falak pema's picture

the Merkozy show will show us what is the end game Eu on November 3/4. Not long to wait to see how far the kings of EU will raise their ante and how the market reacts to it; As BK has clearly pointed out when the governments take on the market its the markets that win.

We will see how true this is; given Merkel's 'cold feet' show so far I don't feel the EU has many bullets left to stave off a Greek collapse by year end. What happens after like revisiting the wild west in 1849...Gold rush...??

Mon, 10/10/2011 - 13:51 | 1758210 Bob Sacamano
Bob Sacamano's picture

Need more T-Accounts.  Where does the EFSF get the "Equity?"    From sovereign Euro countries??  OK, where do they get they get the "Equity?"  


Mon, 10/10/2011 - 14:09 | 1758302 SheepDog-One
SheepDog-One's picture

No one can answer any of that, all they know is its 'good for equities', LMAO.

Mon, 10/10/2011 - 15:34 | 1758720 pcrs
pcrs's picture

They buy the equity with the bonds they issue. In reality they have only 18 million in real equity, the rest is leverage.

The only reason that you and I can not start a corporation and issue billions of bonds to buy billions of equity, is perhaps that no one would buy our bonds if they heard we were going to buy dodgy banks with it. But the reason the ESFS can do this, is because there is an implicit promise of tax slave bailout in the future when the tax slaves are even better trained to work hard and be more obedient and docile. I think they are right.

French children are already getting a mandatory class to explain to them the benefit of the EU.

Hail Mao.

Mon, 10/10/2011 - 13:56 | 1758238 Dick Darlington
Dick Darlington's picture

10-10 13:36: Belgium leader Leterme says the EU should pick up the slack if...


The saga of gubbermintless and insolvent Belgium goes on as it seems that panic is taking over the tax payer slaughterer Leterme. He just can't see other ways than to destroy eurozone tax payers and if some are unwilling to pay for someone else's mistakes, it's the tax payers in the whole EU who now should pay for the horrible mistakes made by the insolvent and oversized Dexia and in due course the Belgium itself. Only one question remains unanswered: Where the hell are the hand cuffs?

Mon, 10/10/2011 - 13:57 | 1758255 LookingWithAmazement
LookingWithAmazement's picture

Dexia is saved, markets rid of a troubled case. Rally!

Mon, 10/10/2011 - 13:58 | 1758260 wombats
wombats's picture

How is this any different than just printing money and handing it to the the FED does?

Mon, 10/10/2011 - 13:59 | 1758269 vote_libertaria...
vote_libertarian_party's picture

Something doesn't sit right with me.


Who are the invstors that are going to leave deposits at the ECB?  Other banks?  Gvts?


If you think the ECB is going to be eating losses why would you leave deposits there?

Mon, 10/10/2011 - 14:00 | 1758274 Deadpool
Deadpool's picture

checkmate. Enter the one world currency.

Mon, 10/10/2011 - 14:19 | 1758325 SheepDog-One
SheepDog-One's picture

I think its all just a damn bluff myself. Even an idiot knows you cant get out of bankruptcy by going further in debt.

Final step to ensure everyone is chained together tightly for the final plunge into 1 world govt 1 world currency controlled by Goldman Sachs cabal.

Mon, 10/10/2011 - 14:06 | 1758290 nomoreoil
nomoreoil's picture

RIP James

Mon, 10/10/2011 - 14:40 | 1758433 fadgadget
Mon, 10/10/2011 - 15:46 | 1758779 nomoreoil
nomoreoil's picture


Mon, 10/10/2011 - 14:44 | 1758461 CHARLIE.DONT.SERF

Might be worth noting that this video was uploaded by the Institute for New Economic Thinking (INET).  

Here' s a link to a video describing who and what is behind the INET.  Be prepared to hear a bunch of bullshit about how wonderful Soros (the man behind the curtain) is and how the Keynesian fucktards that were completely caught off guard in 2008 are going to revolutionize economics.  The guys that admit to being caught completely off guard are going to get together in order to make sure it never happens again.  Reading Menger, von Mises, Rothbard, Hayek would be just too easy and wouldn't require all the IQ they have assembled.  

It's funny to hear them have a quasi sexual experience every time they mention Keynes.  Talking heads include Martin Wolf, Chief Economic Advisor to the FT, Stephen Heintz, President of the Rockefeller Brothers Fund, Joseph Stiglitz and two other Nobel award winners.  I'm devastated that Krugman didn't even make a cameo.  

Mon, 10/10/2011 - 15:03 | 1758551 Withdrawn Sanction
Withdrawn Sanction's picture

That video is a very succinct description of a shell game.  Notice when the money market funders balked at roll over, the narrator says the ECB steps in between them and D(r)exia to offer a purchase/deposit facility that solves the liquidity problem, but does notthing to address solvency.  And he's right; except he then dropped this train of thought when it came to the EFSF and its Euro-bonds.

It doesn't matter how many times they're shifted around or how many hands the bad assets pass through, they're still bad and someone will be left eating the losses.  This is why, I believe, German politicians rightly balk at the prospect of Euro bonds.  They are bad "solution" to this particular problem, at the same time they are bad idea generally in that they unbridle the spending procilivities of the most worthless members of society (i.e., politicians).  

Mon, 10/10/2011 - 15:21 | 1758662 dhn
dhn's picture

Note there is a blog post that goes with this video:

Full disclosure I am a coauthor on this blog, though this was not my post.


Mon, 10/10/2011 - 15:29 | 1758700 bsdetector
bsdetector's picture

Who in their right mind would buy those dodgy assets? Wait a minute... Could they be foisted upon us if the Fed decided to purchase them? The Euro taxpayers aren't that stupid to by them, are they?

Wed, 10/12/2011 - 09:38 | 1765252 karmete
karmete's picture

Well done! Thank you very much for professional templates and community edition sesli chat sesli sohbet

Do NOT follow this link or you will be banned from the site!