Video Explanation Of How The ESM Is Europe's Uber-TARP On Steroids

Tyler Durden's picture

Three years ago, Congress balked at the mere thought of giving Hank Paulson's (so lovingly portrayed in Andrew Ross Sorkin's straight to HBO Too Big To Fail) proposed TARP, which came in an "exhaustive" 3 page term sheet with limited bailout powers however with virtually unlimited waivers and supervision, and voted it down leading to one of the biggest market collapses in history. Curiously, a more careful look through Europe's €500 billion (oddly enough almost the same size as America's $700 billion TARP) European Stability Mechanism or ESM, reveals that in preparing the terms and conditions of the ESM, Europe may have laid precisely the same Easter Egg that Paulson did with TARP, but failed. Because at its core, the ESM is like a TARP... on steroids. It is a potentially unlimited liquidity conduit (only contingent on how much cash Germany wants to allocate to it - which in turn means how much cash Germany is willing to let the ECB print), with no supervisory checks and balances embedded, and even worse with no explicit or implicit liability clauses - in essence it is a carte blanche for its owners to do as they see fit without any form of regulation. As the following brief but must watch video explains, the ESM "is an organization that can sue us, but is immune from any forms of prosecution and whose managers enjoy the same immunity; there are no independent reviewers and no existing laws apply; governments can not take action against it? Europe's national budgets in the hands of one single unelected intergovernmental organization? Is that the future of Europe? Is that the new EU? A Europe devoid of sovereign democracies?" Ironically even America's feeble and corrupt Congress stopped a version of TARP that demanded far less from the taxpaying citizens. Yet somehow, Europe has completely let this one slip by. Is it simply to continue the illusion of the insolvent Walfare State for a continent habituated by zombifying socialism, or is Europe by now just too afraid and too tired to say anything against its eurocrat class? One thing is certain: when the people voluntarily give up on democracy, out of sheer laziness or any other reason, the historical outcomes are always all too tragic.

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prains's picture

I think bob marley had the odd blunt

philipat's picture

To respond to WestVillage Idiot:

Following the example set by Congress in voting to allow the military to detain US citizens on US soil indefinitely and without judicial reveiw?

LeBalance's picture

patience, young one, whenever such filth cry out to the greater cosmos: "I am the most evil fucker ever" they are invariably attracting an even more evil one to bone them in their blind spot.

/blessed angel of dark and light/

Mr. Mandelbrot's picture

You must be WAY over my head . . .

devo's picture

Bullish for gold.

WestVillageIdiot's picture

Long-term most likely.  But in the meantime they are still bringing down the paper.  Just look at silver today.  It is getting the Jodie Foster on a pinball machine treatment.

Keep your powder dry for the physical, boys.  Don't fire until you see the whites of their pockets. 

devo's picture

I'm amazed people want dollars. I bought pretty high (1700), so I am feeling massive pain right now. I actually listed some of my stash for sale over the weekend, but after doing so I was like "WTF, I don't want dollars"...

I think I'd rather just get crushed in metals and buy more/average it out if I have to than hold dollars. I really did panic last week with that drop, and I feel like it hasn't bottomed yet, so there's probably more pain coming. Luckily I went 75% gold/25% silver so I'm not feeling as much pain as those who purchased silver recently.

That last sell off was bizarre. It was almost a preemptive liquidation for an anticipated market collapse. Maybe people booking year end gains and such, but very strange. If the stock market collapses, like it should, then more pain. Hate how gold is trading like a risk asset. Really want to see decoupling from stocks and paper--until then gold is those assets derivative and will behave like them. Sucks balls.

WestVillageIdiot's picture

Nobody should view one gold or silver purchase as their only purchase.  Protecting yourself is a lon-term goal.  Therefore it should come with a long-term plan.  I bought silver at close to $40 per ounce.  I also bought it at $11 per ounce.  I will buy again.  Gold and silver should be part of your savings plan, not part of your investment plan.

Good luck.  Just remember, rust never sleeps.  

Better_late_than_never's picture

I'll just wait to buy life insurance next week when the price goes down. It's not like im going to die tomorrow. /sarc

This world is one news story away from collapse. Trade paper for phyzz and forget about the numbers. Check the numbers in two years after they get the internet running again. lol

devo's picture

That's why I bought. I don't regret buying; I regret knowing I could have owned more OZs for those dollars.

The only reason I thought of selling was that I could repurchase more OZs if it dropped to 1200 range. But fuck being a weak hand. I will just ride it out.

blindman's picture
Really interesting video on ‘scrap gold’
Posted on December 19, 2011 by maxkeiser

Rainman's picture

Hell, we're talking Xmas Eve Fannie Freddie bailout unlimitedness redux....nobody got jailed or hung in USSA.....ESM a go ! 

WestVillageIdiot's picture

You got that all wrong.  There was nothing wrong with the Fannie and Freddie bail job because little Timmy Geithner (the angel of financial death) told us that it would never cost the taxpayer a single penny.  And it hasn't.  Oh, wait.  That's right.  What are we at now, $160 billion and counting? 

Hey, Obama, how does that fucking Geithner guy still have a job?  All I want for Christmas is Timmy's two front teeth. 

Mr Lennon Hendrix's picture

I think it's funny that the people that call me a doomer are the same people who say the world would have ended if we hadn't bailed out the banks et al.

gangland's picture

hank and neel would be proud

JustObserving's picture

A Europe devoid of sovereign democracies?  What about the sovereign power of the Fed in handing out $29.6 trillion in 2008 and refusing to tell Congress.

The fiat Ponzi scheme has a lot to hide whether here or in Europe.

700 billion Euros will not be enough though.

Europe better crank up those printing presses.  Bernanke will help too.

RSDallas's picture

Next thing you know Obama will be trying to sign up the USA.

WestVillageIdiot's picture

Anything that will hurt this country is good for Obama.  Come on, everybody knows the guy hates the fucking USA and all its people.  Can we really have any doubt left on this one? 

merizobeach's picture

I don't think he hates it any more than the last guy.  Or any more than me, for that matter.

falak pema's picture

this is treason! to have even proposed such a scheme...if this is true. We must ALL act on this.

There is such a thing as a European PArliament, they CANNOT bypass it.

sampo's picture

Actually, there's no practice they (MEPs) could REJECT it. Only the national governments can.

nmewn's picture

National sovereignty bitchez.

Curtis LeMay's picture

Old Europe's "elite" know nothing else than tyranny and despotism.

Hell, look at who they've come up with. Hitler, Marx, Engels. Napoleon. Even Pol Pot was educated in France. Then look what happened with what old Europe's leaders did to millions in their now former colonies like Algeria, The Congo, Rwanda. The list is endless and mind numbing....

Welcome to the EU "project", fellas.

About damn time we here in the New World started paying a hell of a lot more attention to what's going down in euroland...

end-of-daze's picture

Don,t you realise that you are the real problem. Please just stay home for the next century!

Terminus C's picture

The irony of your name and your post is too much...

Also, if you live in any "western" state, you are throwing rocks from a glass house.

Papasmurf's picture

The looting till continue so long as there is loot.

floridasandy's picture

good one.


first, i thought that you spelled morale incorrectly and then i realized it is correct to say moral.


the morals desperately need to improve.

homer8043's picture

So the ESM writes our current treatment of bankers into law. Great. Just great. Cue riot cam.

youLilQuantFuker's picture

I hope Lasagna shows up on your cam show he's my favorite riot dog.

High Plains Drifter's picture

it doesn't matter what they want .  just like here.   their leaders read it and know about it but signed it anyway.......just like they have done here.  if one deals with idiots then it is easy to not respect idiots.......because idiots are idiots...........

Ratscam's picture

ESM = European Seizure Mafia

zilverreiger's picture

Each member country appoints its own governor and vice governor.

They rule by majority vote and some with 2/3th majority.



nmewn's picture

The appointment of govenors & vice govenors being operative here...unelected.

I would assume there is a way for a majority of this "grand council" to remove a recalcitrant govenor (without digging through the pdf) as well.

And we are left with the same old...who will watch the watchers.

non_anon's picture

yep, treaties have been and always will be a way for the establishment to make an end run around the rule of law and the republic.

Jumbotron's picture

Village Idiot said....

how does one get to be such a sick fuck that they can even think up such monstrous fucking ideas as these?  I just can't comprehend the level of evil that it takes to be behind this bullshit.  That is why evil so frequently wins.  We just can't believe that such evil fucks exist therefore we can't fight them.

V.I. hang on to your hat.

For those that have read this already, my apologies.

But I have found the most HOLY SHIT artcle I have ever read since waking up from the Matrix in 2008.  Granted it's conjecture on the part of the writer but it makes PERFECT sense.  If even close to true then it truly is the roadmap to serfdom by the banks.  Not one sovereign nation is safe....not one. 

In the wake of MF Global, this article makes perfect sense.

This is not spam....please take the time to read it.  It is in depth, it will take a while but.....Holy God in Heaven.....if this guy is correct......

oldschool's picture

Thanks for the link.  I recommend it to all and look forward to some ZH comments on it.

nmewn's picture

May be on to something here...

under a 2005 amendment to the bankruptcy laws, derivatives counterparties were given the advantage over other creditors of being able to immediately terminate their contracts and seize collateral at the time of bankruptcy. (p. 48)

So when a bank goes bankrupt, BEFORE even the most senior bond holders, the repo lenders and derivatives traders can remove, or keep all the assets pledged to them.

Teamtc321's picture

This information bring's a  question of what exactly happened under TARP also. 

blindman's picture

this link seems to work.
Plan B – How to Loot Nations and Their Banks Legally
By David Malone
money as debt II.
Money As Debt II-Promises Unleashed-Full Length Documentary
you have no deposits in banks. you have an account
that indicatest the loans you have made to the bank.
the money in the bank is the banks money, not yours,
till you remove it.
living through the end stage of a 100 year confidence scam.
we have had plenty of time to figure it out.
trust no man

Scalaris's picture


Thank you for the link as well.

I've read an article called "How George Soros Ended Up With MF Global’s Client Money", and I was wondering how it wasn't illegal for MF Global’s segregated clients to remain a counterparty to the trade by default, without their permission, but then I've read about the special bankruptcy amendment and the Gramm–Leach–Bliley Act.

"..under a 2005 amendment to the bankruptcy laws, derivatives counterparties were given the advantage over other creditors of being able to immediately terminate their contracts and seize collateral at the time of bankruptcy."

An extract from the International Centre For Regulation Conference on Future of Banks' Funding

"Professor Perotti outlined how over the 2002-2005 period, bankruptcy laws were changed in all EU countries and the US, and secured financial credit (repos) and derivative counterparties gained a strong bankruptcy privilege, amounting to de facto “superpriority”, as counterparties could gain immediate repossession of collateral in default (so-called “safe harbor claims”, as opposed to having to accept the “automatic stay” which protects the debtor in Chapter 11 for example)."

"As often in financial regulation, this leads to unintended consequences. As a default leads to repossession of collateral for all safe harbor claims, repossession accelerates fire sales, resulting in a disorderly resolution, with a rush to sell collateral ahead of others, creating a downward spiral in valuations. The timing of the jumps in risk spreads on Lehman, two days after the default, demonstrates this effect, as does AIG."

Also, There are two interesting papers:

Zero Govt's picture

"..(repos) and derivative counterparties gained a strong bankruptcy privilege, amounting to de facto “superpriority”

in Europe and America

So now we know who is the most powerful at moving politicians and Legislatures and we also know who are the most politically corrupt ... the repo and derivative financiers

Via the bankruptcy laws they get first bite over the carcass and steal other peoples money (segregated funds) they have absolutely no title to

and would we be surprised to find the financiers that sell derivatives and trigger a default and liquidation event are one and the same?? AIG and MF'ing Global

Nice job selling absolute trash (bets that'll never pay out), triggering a default and then getting to strip real assets out a company based on a worthless piece of garbage (ie. Repos and dervitaives)

SHRAGS's picture

Jumbo, thanks for the link.  Both Jim Sinclair and Martin Armstrong mentioned in recent interviews the Repo and bankruptcy laws as the root cause of the problems.

Martins interview on KWN, jump to about 11:00 minutes

He talks about the effect of losing AAA status and repo's.


Jim Sinclair at about 4:30 min in talks about the changes to the bankruptcy laws: 

Jumbotron's picture thanks to all you guys who posted links to related info.  This is what I love about the internet and ZH in particular.  Knowledge begets knowledge.

In particular, Scalaris, concerning part of what you posted......

Professor Perotti outlined how over the 2002-2005 period, bankruptcy laws were changed in all EU countries and the US, and secured financial credit (repos) and derivative counterparties gained a strong bankruptcy privilege, amounting to de facto “superpriority”, as counterparties could gain immediate repossession of collateral in default (so-called “safe harbor claims”, as opposed to having to accept the “automatic stay” which protects the debtor in Chapter 11 for example)."

I remember reading years ago about how European and US banking laws were in the process of being "harmonized" in part so our two systems of banking could be on a more level playing field.  Now I know's not so much a level playing field as it is a level killing field for the sheep

Even these words from the past, during the run-up to the first Gulf War, have much more meaning now, seeing as how the New World Ponzi (let's drop the New World Order) is run on cheap oil......


With the domestic consensus for the Administration's policy on the Persian Gulf beginning to fracture, Secretary of State James A. Baker 3d declared today that a primary reason the United States must confront Iraq is to save American jobs.

Speaking with reporters after a hastily arranged meeting here with Canada's External Affairs Secretary, Joe Clark, Mr. Baker dispensed with some of the more abstract explanations for the Administration's gulf policy and focused on the fate of the American worker.

"The economic lifeline of the industrial world runs from the gulf and we cannot permit a dictator such as this to sit astride that economic lifeline," Mr. Baker said, referring to the Persian Gulf's oil reserves. "To bring it down to the level of the average American citizen, let me say that means jobs. If you want to sum it up in one word, it's jobs.

"Because," he continued, "an economic recesssion worldwide, caused by the control by one nation -- one dictator if you will -- of the West's economic lifeline, will result in the loss of jobs for American citizens." Selling an Idea.


It wasn't so much about oil but oil's ability to not only lubricate the machines of production but the financial machine as well.

Jesus !  We really are in for a nightmare of bank designed serfdom and wars over oil either in the Middle East or against Russia and/or China forever... 

YuropeanImbecille's picture

Once again the guys who killed Jesus will rape Europe, why does history always have to repeat itself?

I guess this time around, they will have every single man, woman and child on the continent against them tho, last time they raped Germany and got flogged for it, this time they are raping the entire continent.

Information is freely availble online about their work, even if they have large armies of paid internet shills that spread their propaganda. The squid needs to die, and we need to make sure this can never happen again!


never again!



WestVillageIdiot's picture

Wasn't it the Romans at Golgotha that are said to have put Jesus on the cross? 

Jumbotron's picture

YuroeanImbecile said...

Once again the guys who killed Jesus will rape Europe,

You mean Italians ?  Right?

You do know...Yur An Imbecile...that Romans killed Jesus.  They controlled Judea at that time through the Governership of Pontius Pilate...a in from know....which is still in modern day Italy.

The Jews only CONDEMNED Jesus....they had no power to actually put him to death.  And you do know that Jesus was a ....wait for it.....wait for it.....a Jew?   Right? actually does look like modern day Romans will have a big hand in raping Europe.



InconvenientCounterParty's picture

I was there. There was this articulate progressive who pissed off the conservatives and was executed.

His friends took his body afterward as a demonstration of their loyalty. Get over yourself.