http://harveyorgan.blogspot.com/2012/03/greeceirelandhungarysilver-open.html
Submitted by Tyler Durden on 03/14/2012 08:49 -0400
Submitted by Tyler Durden on 03/14/2012 14:58 -0400
Submitted by Tyler Durden on 03/14/2012 09:09 -0400
"Spain Is Fine" - February Spanish Bank Borrowings From ECB Rise To Record
And how can it not be? As Banco de Espana just released earlier today, Spanish banks have borrowed a record €152 billion in February, a €19 billion increase from January. At least we now know what the capital shortfall was in Spain since pre-LTRO days, when total borrowings were €98 billion: "LTRO is for carry trade purposes"... right. So thank you European tax payers, and the 'bad bank' hedge fund formerly known as the ECB - you just bought Spain a few more months, however with your actions you guaranteed that nobody will change any part of their destructive behavior, and merely enable even more solvency crises in the future, which will be band-aided with even more trillions in free money, and so on, until the global central banks need to show their expansion not on a weekly but millisecond basis. And oh yes, this explains why Blackrock is tripping over itself this morning recommending Spanish bonds, which "may offer opportunities for long-term investors" - perhaps the same profit opportunity that the ECB had on its Greek bond holdings purchased at 80 cents of par and collapsed at about 20.
and as the borrowing from Greece . Italy and Spain soar , look what happens with Germany and the Bundesbank...
Dear Germans: Bring Out Ze Checkbooks
Something funny happened on the road to a "fixed" Europe.
A week ago we presented the €2.5 trillion closed liquidity loopat the heart of Europe's (solvency and mercantilist) problems: the cumulative capital account deficits of Europe's import countries (virtually all of them except for Germany and Holland), and the under the table funding mechanism, in the form of Germany's subsidizing of said countries via the ECB TARGET2 cash settlement process. In simple terms, in order for the PIIGS to import German "stuff", Germany had to fund their economies in a very roundabout, yet unmistakable fashion (see chart). Well, as the latest update from TARGET2 shows (courtesy of Sean Corrigan of Diapason), the fact that this now accepted enabling mode of existence continues, asnothing has changed in Europe except for Greece going bankrupt, and all the PIIGS still pretending they have fixed their economies when in reality all that has happened is a $1.3 trillion cash injection providing some very brief dry powder to drive bonds to lower yields temporarily, Spain and Greece have just posted their biggest draw on TARGET2 bringing the total to just under €400 billion! Congratulations Germany - This is the amount that Jens Weidmann and the German Bundesbank will have to fund to keep the ponzi going. But at least BTPs and Bonos will be at 0.00% as the ECB floods the market with a quadrillion in paper at a point in the very near future to pretend that the system is solvent judging by bond yields.
To all our German readers: sorry. Yes, extend and pretend actually has a price.
To summarize: the bond market, courtesy of the ECB, has signalled the all clear, if only for a brief amount of time (remember what happened with the first LTRO back in 2009). In the meantime, the PIIGS economies are getting worse and worse. But for the time being Germany can keep them afloat. However, Germany, unlike the ECB can not print money. And in fact, largely does not want to.
And here's the Bundesbank. How does one say exponential in Germano-Grecian?
and as the need to raise real money arise , gold gets sold of to meet ECB margin calls....
Is Another Record ECB Margin Call Impairing Gold Again?
In an update of our post from a week ago, the ECB has increased its margin calls on European banks by EUR162 million this week to another record high of over EUR17.3 billion. While our pointing out of this huge jump from 'average' historical margin calls last week was met with - it's temporary/transitory due to temporary/transitory ineligibility of defaulted (and since undefaulted) Greek bonds (which given the rise this week has now been proven incorrect) or the more prosaic "don't worry, be happy", we remain concerned at both the velocity and now sustained size of these margin calls (as clearly collateral quality has dropped rapidly and remained weak). This is concerning since it would appear we had a good week for collateral (risk assets) in general, so we can only imagine what garbage is clogging the ECB's balance sheet. Theside-effect of this appears to be (as we pointed out here) that Gold (the banks' remaining quality collateral) is being sold to cover these margin calls just as it was in September 2011 (though lease rates have not squeezed as much this time). We can only imagine the size of these margin calls should we happen to have a week where AAPL stock drops or BTPs don't rally (broad collateral actually loses value), but that seems impossible anyway.
ECB Margin Calls to European Banks rose once again to record highs...
And Gold remains offered as the need to fund these margin calls means finding money under every mattress and selling whatever banks have to meet the central banks demands...
Interesting that gold lease rates did not drop (soar from the other side) in a squeeze this time - as they did in September 2011.
end
Target 2 is the funding mechanism which allows Germany to fund the rest of Europe.
You will recall that last month Germany has basically loaned the PIIGS nations 480 billion euros
as the PIIGS nations were the importers of German exports and the ECB is the central bank
facilitating the exchange. Today, Target 2 financing came out with Germany in surplus of 560
billion euros with Spain and Greece posting the largest draws of an accumulative 200 billion euros
each or 400 billion euros. The imbalances between Germany and the rest of the PIIGS nations
is staggering.
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