[Charts] Stealth bank runs/transfers from the worst Eurozone countries to the less bad

swissaustrian

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ZH and other blogs have extensivly written about TARGET2 (Trans-European Automated Real-time Gross Settlement Express Transfer System 2), the system of the Eurozone which manages the (im-)balance of payments between Eurozone member countries. The charts below show how HUGE sums of money are beeing quietly transferred out of the banking systems of the weakest countries to mainly Germany plus the Netherlands, Luxemburg and Finnland This has to be one of the largest (stealth) bank runs EVER. First more details on the system:

TARGET2 is the real-time gross settlement (RTGS) system owned and operated by the Eurosystem. TARGET2 is the second generation of TARGET. Payment transactions are settled one by one on a continuous basis in central bank money with immediate finality. There is no upper or lower limit on the value of payments. TARGET2 mainly settles operations of monetary policy and money market operations. TARGET2 has to be used for all payments involving the Eurosystem, as well as for the settlement of operations of all large-value net settlement systems and securities settlement systems handling the euro. TARGET2 is operated on a single technical platform. The business relationships are established between the TARGET2 users and their National Central Bank. In terms of the value processed, TARGET2 is one of the largest payment systems in the world.
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Relation to European sovereign debt crisis
TARGET2 provides "automatic central bank funding for EMU countries suffering capital outflows provided through it".
In the context of the European sovereign debt crisis (2009- ), these TARGET2 balances have grown, and gained attention. Financial commentator David Marsh, writing in early 2012, noted the balances would "have to be shared out by central banks throughout the Eurosystem ... if EMU fragments into constituent parts. So the pressure on Germany is to keep the balances growing, in order to avoid crystallization of losses that would be hugely damaging not just to Berlin but also to central banks and governments in Paris and Rome". According to a study of the German Ifo Institute for Economic Research IFO the TARGET2 system may be one of the mechanisms by which Eurozone deficit countries have been fighting their financing problems during the debt crisis. In early 2012, Bundesbank chief Jens Weidmann wrote a letter to ECB head Mario Draghi on the subject which "found its way into the columns of the conservative Frankfurter Allgemeine Zeitung newspaper[. It] appeared to suggest more secure collateralization for the overall ECB credits to weaker EMU central banks, which now amount to more than €800 billion under the ESCB’s TARGET2 electronic payment system," Marsh noted in his subsequent column.
http://en.wikipedia.org/wiki/TARGET2

Now the charts. All numbers are in BILLION Euros (€). The names of the countries are in German, but I think you'll understand them. The word "Salden" means balances:



Same chart with cumulative PIIGS balance



Germany, Netherlands, Luxemburg and Finnland VS the PIIGS



And the only crisis country with an improving TARGET2 account is ... IRELAND:


Germany's central bank (Bundesbank) is effectively holding the Eurozone together.

More charts here: http://www.querschuesse.de/target2-salden/
 

mmerlinn

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In essence, these charts are telling me that Germany is running the show and everyone else, especially the PIIGS, are slaves. Germany has conquered Europe without firing a shot, which leaves more ammo for the next leg.
 

bushi

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(...)And the only crisis country with an improving TARGET2 account is ... IRELAND:
...which is to be said, it improved from some -€140bln/MONTH cash outflow, to -€100 bln this last months...

Patient is improving, although still dead, by any measure ;).

One thing for sure, I'll not get caught with my money locked in Irish bank (not even in Irish branch) on some non-announced upfront bank holiday, and Ireland getting back to it's pre-euro currency... I am not even buying land now, although I would very much like to, but I believe it is still way too overvalued, and secondly, it will be way cheaper here, when the turds start hitting blades eventually...
 

DCFusor

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I guess no one noticed this link I posted on another thread yesterday.

"how to survive the implosion of the euro" - by a rag that reports on computers, not finance, not MSM. To me, when the shoeshine boys and taxi drivers are getting in, it's a serious indicator. (which can either be contrary - or self-fulfilling). It's not a bad read at any rate.

http://www.channelregister.co.uk/2012/05/25/euro_implosion_strategy/
 

ancona

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DC, the only survivors of a Euro collapse will be those who hold gold, silver, guns, ammo and food. Everyone else will get the ass kicking of a lifetime.
 

swissaustrian

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DC, the only survivors of a Euro collapse will be those who hold gold, silver, guns, ammo and food. Everyone else will get the ass kicking of a lifetime.
Guns and ammo are nearly completely banned across all Eurozone states. The only private persons under arms are criminals, hunters and sports shooters. I think the US gun community calls this gun prohibition policy "victim disarmament".
 

DCFusor

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So, SA, you need to become a sports/competition shooter...it's actually fun, you know, and no age limits at either end (rifle shooting isn't very aerobic as sports go) - we have one guy at the club who rolls his wheelchair up to the bench and does real well.

But yeah - I worry about confiscation, not so much of phys PM's - they'd have to know I have them, then find them - but how about my IRA, in a trading account? Which I can't take out without a huge tax hit right now...that one worries me a heck of a lot more. I have all that other stuff, including defensible land...my own power, an electric car...etc ad nauseum.
 

rblong2us

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I guess no one noticed this link I posted on another thread yesterday.

"how to survive the implosion of the euro" - by a rag that reports on computers, not finance, not MSM. To me, when the shoeshine boys and taxi drivers are getting in, it's a serious indicator. (which can either be contrary - or self-fulfilling). It's not a bad read at any rate.

http://www.channelregister.co.uk/2012/05/25/euro_implosion_strategy/
yeah i read this yesterday and smiled

and ive been pondering the risks of a big fiat loan for a while .............
if interest rates shoot up the gov falls over, if they dont inflation gets out of control v quickly.
Can i maintain payments if interest rates shoot up ?

Simpler to leave it all in shiny and not have the worry i reckon
 

swissaustrian

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So, SA, you need to become a sports/competition shooter...it's actually fun, you know, and no age limits at either end (rifle shooting isn't very aerobic as sports go) - we have one guy at the club who rolls his wheelchair up to the bench and does real well.

But yeah - I worry about confiscation, not so much of phys PM's - they'd have to know I have them, then find them - but how about my IRA, in a trading account? Which I can't take out without a huge tax hit right now...that one worries me a heck of a lot more. I have all that other stuff, including defensible land...my own power, an electric car...etc ad nauseum.
I am in the army reserves which are organized as a militia, generally speaking every adult Swiss man up to the age of 40 is a member. We're each storing one personal army weapon at home, so the armament of Swiss households is very different from those in neighbouring countries like Germany and France. I've also received training in both pistols and rifles, so I'm allowed to buy many types of guns "for shooting sports purposes". Weapons registration is regulated tightly, though. US type gun shows are unthinkable over here.
 

bushi

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...so, here's how it works, in short: Capital flows out as crazy from PIIGS countries, and then it is provided back automatically to their respective CBs, overnight, is that right?

What does it tell us about the "bank runs" in the PIIGS? That for as long, as these funds, that have been withdrawn from their banks are to stay within larger Eurozone financial system, it simply doesn't matter - they will be provided back to the "outflow" countries automatically. Actually, Jim Rickards twitted right about that a while ago, I didn't quite grasp what he meant back then - didn't have the background. But in the light of this topic, now I can understand that tweet.

So things would start hitting the blades only if:
-sheeple/businesses start to physically withdraw cash and stuff it in the drawers (=strangle the banking system, not just flow the capital from one country to another)
-transfer it outside Eurozone (strong dollar, anyone, when US financially are on par with (or worse than) Greece, in terms of deficits and debt/GDP ratio?)

...another argument why weak economies wouldn't necessarily gladly give up EZ membership - this is a capital lifeline for them. And remember to look at the situation from the rule/decision maker (govt/central banker) point of view.
 

DCFusor

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Despite what many think (and the gun control freaks spin), nearly all gun sales at gun shows are from dealers, you go through the background check and all that. Person to person gun sales are legal (up to a certain number per year, over that you have to get a license) - but don't need to take place at a show (and often don't). I'm rarely offered guns I'd want, and very rarely sell one privately, as I don't want the philosophical liability of perhaps seeing one I've sold used wrongly. And I'm a bad guy in general to buy one from - if they're really good, I don't want to sell them, and if not - you don't want it either. So for me, they're like PM's - long term investment and something I just stack.

The big difference is that in theory, no one but the dealer keeps track of who got what gun, there is supposedly no master list held by the government of who owns what. I stress the theoretical nature of this for a reason, but our NRA works to keep it that way, if in fact it really is. I had a liberal type visitor the other day who had been told the NRA was against background checks and safety qualifications, but that's not the case - just having a master list, like the one Hitler got so he could pre-disarm all the Jews. Didn't mean to bring in Godwin's law here, oops.
 

benjamen

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Despite what many think (and the gun control freaks spin), nearly all gun sales at gun shows are from dealers, you go through the background check and all that. Person to person gun sales are legal (up to a certain number per year, over that you have to get a license) - but don't need to take place at a show (and often don't). I'm rarely offered guns I'd want, and very rarely sell one privately, as I don't want the philosophical liability of perhaps seeing one I've sold used wrongly. And I'm a bad guy in general to buy one from - if they're really good, I don't want to sell them, and if not - you don't want it either. So for me, they're like PM's - long term investment and something I just stack.

The big difference is that in theory, no one but the dealer keeps track of who got what gun, there is supposedly no master list held by the government of who owns what. I stress the theoretical nature of this for a reason, but our NRA works to keep it that way, if in fact it really is. I had a liberal type visitor the other day who had been told the NRA was against background checks and safety qualifications, but that's not the case - just having a master list, like the one Hitler got so he could pre-disarm all the Jews. Didn't mean to bring in Godwin's law here, oops.
This greatly depends on the state. I currently live in a state where you do not need to show ID to purchase a firearm at a gun show. You simply hand them cash, receive the firearm immediately, and walk out. I love it!
 
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