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Old 12-20-2011, 09:47 AM   #1
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Doodoo ECB's Balance Sheet Now Far Bigger Than Fed's, More Levered Than Lehman

So much for concerns about central banks being timid in addressing the threat of deflation:
Quote :
... today's Bloodmberg chart of the day shows, the ECB's balance sheet is not only far greater than the Fed, at $3.2 trillion compared to $2.9 trillion for Ben Bernanke, but at 30x leverage, has the same risk as Lehman did at its peak. However, one major distinction between the Fed and the ECB is that while the Fed continues to be shrouded in almost impenetrable secrecy on an absolute basis, it is transparent as a wet t-shirt competition during Spring Break at Panama City Beach compared to the ECB. From Bloomberg: "Without information on the quality of assets on the ECB’s balance sheet or how far it’s willing to allow leverage to increase, investors may doubt the bank’s ability to prop up the financial system, and demand higher yields to buy some countries’ bonds, he said. "Sovereign spreads could rise again if investors become uncomfortable with ECB leverage without a fully detailed rescue package,” said Tyce. “The ECB is providing liquidity and confidence to the banking system, yet all the while its own leverage and balance sheet size is hitting new highs. It seems likely that the market will begin to watch the rising leverage with interest and growing concern."
...
More: http://www.zerohedge.com/news/ecbs-b...re-50-6-months


The ECB is no Stanley Ipkiss.
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Old 12-20-2011, 09:57 AM   #2
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The Peoples Bank of China is the most leveraged of all central banks.
The FED is already insolvent. They only survive by using accounting gimmicks which would be considered fraud in the private sector: http://www.zerohedge.com/article/acc...ncy-impossible

Leverage and negative equity don´t necessarily kill a central bank. They can bail out themselves by printing money.

The only thing they can´t do due to their losses on their highly levered balance sheets is to tighten monetary policy. They´re trapped. Great article by mises.org on that: http://mises.org/daily/4869
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Old 12-20-2011, 10:04 AM   #3
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Well, the US might be insolvent, but an entity such as the fed that can print can't be.

And despite all this, the Euro is up, gold is up, the market is up today, bigtime.

The stuff on ZH may be predictive long term, but don't drink the kool aid for short terms, you'll get killed out there.
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Old 12-20-2011, 10:04 AM   #4
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Another article on why CBs will print to infinity:
http://www.safehaven.com/article/207...nankes-qex-box
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Old 12-20-2011, 10:31 AM   #5
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Originally Posted by DCFusor View Post:
Well, the US might be insolvent, but an entity such as the fed that can print can't be.

And despite all this, the Euro is up, gold is up, the market is up today, bigtime.

The stuff on ZH may be predictive long term, but don't drink the kool aid for short terms, you'll get killed out there.
You've got to admire today's total ramp job. Nearly three hundred points on nothing whatsoever. No rumor, no news.....nothing.

Way to go Boyz!! The PPT is working overtime today.
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Old 12-20-2011, 11:58 AM   #6
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FOFOA explains that the ECB is quite different from the Fed, at least in the way they mark their gold to market. And that the euro will be the eventual go to currency (this is the one issue I STILL have not been able to get my mind around re FOFOA).

The ECB is also different from the Fed in that they cannot (yet) print.

There may be BIG DIFFERENCES between the various central banks and what they can and cannot do. And who they are beholden to.

STILL, the fact that they have SO MUCH on their balance sheet and that they are levered up so much might tell us, wait for it,...: BUY GOLD NOW!

A Rolling Bearing with a (generous) two and one-half working neurons just would not know.
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Old 01-01-2012, 04:38 PM   #7
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Good article on the ECB´s stealth QE and it´s presumed effect on PMs:
http://seekingalpha.com/article/3156...money-printing
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Old 01-01-2012, 05:18 PM   #8
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The ECB cant print new cash, but they appear to be prestidigitating paper from somewhere for all those bond purchases. Where the hell does all of that cash come from?
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Old 01-01-2012, 05:28 PM   #9
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Originally Posted by ancona View Post:
The ECB cant print new cash, but they appear to be prestidigitating paper from somewhere for all those bond purchases. Where the hell does all of that cash come from?
Who says they can´t print money or add zeros to digital accounts?
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Old 01-01-2012, 05:35 PM   #10
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Great Jim Grant interview on the ECBs balance sheet expansion, it´s from Nov 10th 2011:
http://www.bloomberg.com/video/79932160/
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Old 01-02-2012, 09:51 AM   #11
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Yeah, that is a good interview. I remember watching it when it first came out.
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Old 01-03-2012, 10:18 AM   #12
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I just read an interesting and scary article over on ZH, detailing the three trillion dollar interconnectedness between insolvent European banks and their American counterparts. We should all be worried about this revelation.
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Old 01-03-2012, 10:24 AM   #13
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Originally Posted by ancona View Post:
I just read an interesting and scary article over on ZH, detailing the three trillion dollar interconnectedness between insolvent European banks and their American counterparts. We should all be worried about this revelation.
Thanks to the magic of derivatives, the global banking network is a gigantic house of cards.
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Old 01-03-2012, 10:32 AM   #14
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.....And it's going to come tumbling down. It really is simply a matter of time. When retail investors pull their cash out of the ponzi, and they are unable to gather up enough collateral to replace it fast enough, that will be the beginning of the end. It will start in Europe and spread like wildfire, as the banks find it impossible to bring in enough cash to collateralize their ponzi "investments" they hold on such tenuous margin.
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Old 01-03-2012, 11:48 AM   #15
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Reggie Middleton (boombustblog) has been warning about these issues for while now. Math doesn't lie.
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Old 01-03-2012, 11:56 AM   #16
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Originally Posted by PMBug View Post:
Reggie Middleton (boombustblog) has been warning about these issues for while now. Math doesn't lie.
Reggie is more often right than wrong. He gets a lot of crap from the storm troopers and armchair economists on ZH, but he's right on in my book. The prescience of his preaching is downright scary sometimes. Does he always get it right? No. Do the timelines always play out exactly right? No.

Is he right more than 70% of the time? Yes.

That is all it takes in my book. Reggie is an underestimated genius.
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Old 01-03-2012, 12:43 PM   #17
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Originally Posted by ancona View Post:
.....And it's going to come tumbling down. It really is simply a matter of time. When retail investors pull their cash out of the ponzi, and they are unable to gather up enough collateral to replace it fast enough, that will be the beginning of the end. It will start in Europe and spread like wildfire, as the banks find it impossible to bring in enough cash to collateralize their ponzi "investments" they hold on such tenuous margin.
I think we basically saw the lengths at which the banks will go to keep the ponzi going. 650 billion Euros through LTRO and another one a month away.. That tells me all i need to know..
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Old 01-03-2012, 01:12 PM   #18
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It will go on and on and on and on and on... They will keep kicking the can, KEEP KICKING THAT CAN... And it will work!

Until it doesn't. And I guess the Eurozone fails first. That will give us a few days to get our cash out of the bank.

Gold > fiats > electrons in the bank.
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Old 01-03-2012, 01:30 PM   #19
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DCRB,
The typical recommendation is about five to eight large, stashed osmewhere accessible and safe, then, a thousand ounces of silver [minimum] and no less than six months of food. The six month rule is supposed to tie in to your first harvest from your new garden, but unless you're superman, or already have a sizeable producing garden, I say 18 months to be safe.
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Old 01-03-2012, 01:42 PM   #20
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Condo dwelling Bearing is not able to start gardening, and Mrs. Bearing has no interest in living in the country. So, I am left with just stocking up on PMs, cash/fiats, and guns & ammo. I have a tiny amount of food. My biggest need is water production, but I need LOTS more food too.

Since we have just one kid (grown and living on her own), I am NOT extremely worried about the fate of Mr. and Mrs. Bearing. Our kid is doing essentially NO preparations, but is aware of my views and to an extant shares some of them.

All our gold (etc.) rblong2her, at the end of the day. Whatever we have is likely to go to her. If it's just a Great Depression (v. 2) no problem, we'll just wait it out. If it's TEOTWAWKI, we'll either be in Peru, or we will die. Maybe I will take some psychopaths with me!

"Save a place for me in Hell, right next to the furnace."
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