Thread: Art Cashin Exposes The Behind The Scenes Panic In Europe

Art Cashin Exposes The Behind The Scenes Panic In Europe

Submitted by Tyler Durden on 12/28/2011 09:26 -0500

Think "all is fine" in Europe after today's largely irrelevant Italian bill auction (the auction was for 6 month debt - even Greece can raise that kind of money)? Think again. Here is the Fermentation Committee Chairman explaining why Europe is so hard pressed to create a fake sense of calm, allowing those who know the real story to take advantage of the situation while they still can, and sharing the behind the scenes truth you won't get anywhere else. Certainly not SWIFT.

From UBS:

Europe Rumbles Continue Beneath More Upbeat Headlines - Ever since last week’s liquidity operation, most headlines out of Europe have leaned toward the reassuring side. Beneath those headlines, however, there are signs the strains remain and may, in fact, be growing.

European banks are making great use of the ECB’s overnight deposit facility. Last night they parked $590 billion at the ECB breaking the record they had set the night before. They are clearly unwilling to lend to other European banks, highlighting the distrust and fear in the interbank marketplace. While the ECB’s lending initiative calmed the markets somewhat, it apparently has done nothing to free up the logjam blocking interbank lending.

The distrust on the streets is said to be growing also. Barroom gossip says that safe-deposit boxes are in a demand that borders on frenzy. They allow you to take your Euros and covert them into something of value (gold, Swiss Francs, etc.) and sock it away in a safe place.

Others are said to be buying property in London and elsewhere lest you awake one day and discover that your Euros have reverted to drachmas or lira.

Savvy bankers are said to be setting up personal and communal trusts domiciled in places like the Bahamas, the Caymans or the Isle of Jersey. Some banks are offering depository accounts denominated (and repayable) in alternate currencies like the dollar or the yen.

We think a Lehman-like event would most likely be triggered by a run on a bank or a series of banks. The scramble for currency (value) protection among the public could turn into that bank run in the same way that a crowd can instantly turn into a mob. Watch the money flows out of Greece and Italy very carefully. The pot continues to bubble

http://www.zerohedge.com/news/art-ca...s-panic-europe

EUR Plunges In Thin Market, Below 1.3000

Submitted by Tyler Durden on 12/28/2011 09:40 -0500

While it is unclear what just spooked the EURUSD, sending it lower by 70 pips in minutes, perhaps a better question is why the EURUSD is not thousands of pips lower to begin with. As a reminder every single large bank is pushing for a lower EURUSD on hopes that a EUR collapse will kill the market and send the ECB scurrying into printing money. The problem there is that the ECB just announced its balance sheet expanded to EUR 2.73 trillion, an expected increase of over EUR 200 billion in one week (since the LTRO), and a whopping EUR 800 billion in 6 months (that's $1.1 trillion... in six months)! As such, good luck selling to the Germans on the ECB board that EUR 1.6 trillion annualized is insufficient. Lastly, and as a reminder, here is the only correlation that matters in 2012.




http://www.zerohedge.com/news/eur-pl...et-below-13000

Update On The "Non-Printing" ECB's Parabolically Rising Balance Sheet

Submitted by Tyler Durden on 12/28/2011 11:03 -0500

While the surge in the ECB's balance sheet has been discussed to death on these pages, with a particular emphasis on what we believe the key correlation driver-cum-pissing contest of 2012 will be - namely the relative size of the ECB vs Fed balance sheets - it is often best to see things for oneself. Such as the fact that the balance sheet of the European Central Bank, which has been accused of not printing, has grown at the fastest non-pre apocalypse pace in history for a modern central bank (the only exception is the Fed, whose balance sheet grew from under $1 trillion to over $2.2 trillion in the aftermath of the money market collapse in about a month), increasing by EUR800 billion, or over $1 trillion, in six months, to E2.73 trillion (obviously an all time record). Annualized this is an increase of over $2 trillion or more than the Fed did in all of QE1. So, just what happens next year when the banks box Draghi in a corner and the Goldmanite decides to actually... print. Perhaps this is a question, as before, left best to our German readers, who unlike their detached from reality peers in the US, know that hyperinflation is and can be all too real.




http://www.zerohedge.com/news/update...-balance-sheet