“I have one euro left….any takers?”

Draghi stunned by trebling of liquidity demand

On December 23rd last, The Slog analysed the rate of acceleration in private eurobank demand for money from Central Banks. I calculated that pumping in liquidity at this rate would cost the taxpayer $9 trillion by the end of March 2012. I also said the river would soon be dry again. Here we are on the last day of January, and the eurobanks need a trillion euros more. If the banks do take the full trillion, that will make the running total $3.3 trillion since September.

The FT carries a piece this morning which, following interviews with eurozone bank heads, suggests that the 325bn euros set aside by Mario Draghi for his next (imminent) session at the liquidity pump is less than a third of the amount bankers want. There is a pearler of a quote from one of the anonymous MoUs as follows:

“Banks are not going to be as shy second time round, we should have done more first time.”
Shy, eh? I love it: welfare dependent or what?
I first started posting about this a year ago. There are now so many elephants in the eurozone, pretty soon there won’t be any room for people. We’ll have to house Jumbo and his chums in the Treasuries of Europe. But that’s OK: they’re emptying fast.


  1. Today, the interest-rate derivatives swap sector is worth $365 trillion. It is, by far, the biggest market in the world.
    A target 3% average US long bonds allows for large amounts of QE to counteract the real deflation , and allows the massive abundant fraud in interest rate derivatives to remain buried for longer than an elephant can remember.
    What’s another 3 trillion (1%)?


  2. I just don’t get it anymore, the whole thing is surreal.
    When we were kids playing in the playground, and I’m talking 4-5yr olds, and we said ‘’I bet you a million quid you can’t do this or I can do that’’ no one expected the bets to be paid. We seem to be doing exactly that now with real money and the bookies are walking away with huge bonuses?
    Time to get rid of the lot of them and start again…………….


  3. Rule of 72 says 24 years @ 3 % + generous interest + say (6 years?)
    My back of envelope says money can halve in value while asset prices appear static, while governments tax it all back over 30 years.
    QED when you know how..


  4. As Sen Everett Dirksen used to say ‘ A trillion here and a trillion there and soon you are talking real money’.


  5. I remember years ago saying the UK alone needed at least a trillion of QE, and you all laughed, laughed you did!

    I presented the choice as a massive, but one time, hyper inflationary event or a near total collapse of the modern nation state, laughed you did, the lot of you.

    But here we are, Greeks are dumping their kids on anything vaguely resembling government, how long till the orphanages run out of food and Geldoff steals the credit for Midge Ures famine relief effort again?



  6. You think this is real money? Ha! What labour or enterprise did Europe exert to create 1 Trillion in wealth just recently? What baubles or trinkets or roads or runways did we create to support or justify it? None. Where are the material goods that this “money” is supposed to represent? Huh? In the Future? Not there either, we had had the “great manufacturing era” it won’t come around again. No, it’s not real money it’s monopoly money in a big game of Risk or Campaign… and the Troika is winning at the moment. The people need to start creating their own trillions of People-Value-Money something that is actually a store of value and retains that value and reject out of hand this monopoly money of the elite, that is rapidly becoming less than useless, but concurrently becoming a millstone around their necks.


  7. If you wish to remind yourselves how carefully orchestrated collective madness can impact a nation state then read or re-read Alexander Solzhenitsyn’s The Gulag Archipelago. In terms of madness and the ultimate effects of how corrupted politcal and financial power can totally poison a society, I can’t help wondering if it isn’t all happening again.


  8. ..If one trillion elephants stood side by side in Belgium.would they all fit ?…it is surreal. These numbers are for astro-physics. We should be considering black-hole numbers ie. one trillion euros per month disappearing over the event horizon equals one Mugabyreich. They could all talk more utterly meaningless polito-economic shit totally divorced from the reality of the real economy ,and preferably conduct their conversations from an appropriate lunatic asylum.


  9. Extraordinary times we live in. I struggle to grasp the figures you quote some times John. I was in talking with two friends the other night about starting a new political movement/party in light of the situation we are in and the dire calibre of our existing political choices, where to begin though.

    There is clearly a lot of work involved in keeping your blog going at its current pace, I feel in many ways your doing a national service.


  10. @ timbo614

    Yes indeed, how much longer before we are back at “You cut my hair and I’ll cut your grass!” Or, “You check my computer out and I’ll do your oil & plug change.” Slowly but inexorably, it’s heading in that direction. I am given to understand that there are already several “regional” currencies based on this same basic idea. Both in UK and DE!

    Without a doubt, a certain sector of society is going to get a rude awakening when they all of a sudden realise that the millions resp. billions of £/$/€ that they lay claim to in their bank accounts is worth nothing more than common or garden bum-fodder.


  11. The money masters will likely keep feeding the debt monster, the monster will grow exponentially until it becomes so fat it bursts.

    I fail to see why we are expected to repay debts incurred without our consent or knowledge by scheming people we have no control, influence or oversight over.

    Odious ethereal debt …. solution debt forgiveness and default.



    The Lawful Bank provides a gateway to ‘The Alternative Monetary System’ (TAMS) – a new and independent monetary and banking system owned and controlled by its users/members. The objective of TAMS is to take back control of the money supply for the benefit of the people of the nations that choose to use it… and by so doing, reassert the sovereign right of the people to self-governance – for a nation cannot truly govern itself unless it is in full control of the means by which its money is created.


  13. I don’t know why Draghi is surprised, in reality he probably has a good idea how insolvent the banks are. He would also know that the EBA stress tests are a joke & that the banks have been consistently marking to model rather than to market value. Also they have been counting money owed to them as assets when they know damned well that they will never get back what is owed as it is toxic crap. A proper independant external audit of the banks would be a good idea, especially in our case for RBS, seeing as taxpayers have invested 45 billion into it, it will never happen though.


    Look at 1 trillion in 100 dollar notes, the red blob is a man standing by the double stacked pallets.

    Raging Tory, I did not laugh.


  14. Well,it is a bit nippy down here on the South Downs,clearly all these Euro politicos have got their banks and government budgets into a huge mess,but I can no longer find a City boy prepared to pay me silly money to dump shares in a certain supermarket group on me at a future date. Straw in the wind?Then we are told the UK has no industrial base,blah ,blah, etc ,the country headed for oblivion,China,India,we cannot compete..Bollocks.. there is great value out there in the much ignored manufacturing sector.. C…i.g. and R..i..a. for example,OK there is still a very painful adjustment to come for the overgeared Fulham crowd,but there will be enjoyable global warming,come June,down here…


  15. I’m still puzzled why the German Bundestag and electorate have not woken up to the ECB money printing which must be known and agreed to by their esteemed leader Mrs Merkel.


  16. @VJ
    the regional currencies that you mention certainly do exist. The problem is that they can only be used in the manner you describe – which is where a real currency has far more use. There are just so many oil changes one can do for the many hopes for computer re-setting, or whatever you choose.

    The realities of an imploding currency were felt by members of my family in Zimbabwe, it was not nice. To my mind, there is much I would prefer to that happening. I think many Zims would have preferred even a German takeover to what they had to go through in those long, hungry years where there was one loaf of bread on a supermarket’s shelves at the official price – yet for 100,000* times more there would be a lorry load around the back. (*not official figures, sorry**).(**there were none).


  17. Dear All
    While it’s all very well saying this is monkey money and unreal, the trouble is that some folks somewhere not only believe that are owed it….they’re going to demand it once the CDIs, CDSs, bond maturities, and Tom Cobbleigh come rumbling home to roost.
    At that point, it will be rather pointless to laugh nervously while saying, “Only kidding….”


  18. It reminds me of the Woody Allen character in the film Sleeper(i think) who was woken after 300years in cryogenic suspension to find he had left the light on in his apartment and now owed the American Power Co $60,000,000 …


  19. I take your point timbo614 and agree, it’s just I have worked all my life to make my People-Value-Money and am now watching as it is devalued and stolen off me! Might be that I was daft to trust the system these idiots put in place but really that’s all we had to work with.


  20. JW: As noted yesterday I don’t comment much, but when I get started… Printing a Trillion at a time makes it monkey money. One thing to remember: “Debts that can’t be paid won’t be paid”. That simple rule will come into play if the manure connects with the whirly thing.

    Look at these stupid numbers from the point of view a man in the street, There he is trying to impossibly pay off a 23% PA £/€ 1,000 credit card bill.. Then the ECB “Magics up” 1 Billion Times that amount… Where is his bit? He and everyone else is doing the best they can, plodding along, painfully paying the debt. But the bank’s debt gets created for them, from nothing but keyboard strokes. Very soon a lot of plodding people are going to wake up to the thought “What point is there in my paying them 230 / year – when they can have a billion times the amount for free or damn close to it?” The plodders will also wake up to a similar thought about taxes and entitlements, what entitled the banks to all the tax money? And where did it suddenly come from when, if we had it stashed somewhere, we could have used it for other things that are desperately needed?

    The only reason this is not causing a revolution is that the plodders don’t (yet) understand it. They do not / will not believe that a bank like the ECB or BoE can simply make up what they need. It can’t be that simple they say.. they borrow it.. I say 3 Trillion and counting?.. from who? What industry or tycoon do you know that made that much money?

    There are now 7 billion of us on the planet and to supply a Trillion €, every single person, from newborns to centenarians would need to contribute €140 EACH to create it. – It’s monkey money – we need People-Value-Money; a money that can’t be created by banks that can only be created by governments and sovereigns and then spent into existence. Spent into existence in the country it is supposed to and would benefit.


  21. If there is someone in this blog who can answer my question, I would appreciate it very much!

    ECB-loans to banks must be collateralized with securities. Where do the banks get so many securities from so that they can collateralize so much in loans? What kind of securities does the ECB accept?

    Thanks in advance!


  22. Aren’t our so called “big 4” auditors supposed to be independant and doing that job? That was a rhetorical question, they no more deserve their fees for auditing banks than the bankers deserve their bonuses, the whole shooting match is a total disgrace. Some how the lawyers and accountants have avoided the odium so for, not for too much longer hopefully.


  23. try googling mark to model or mark to fantasy – that the is the type of “collateral” they are using. See: ECB LTRO conditions In other words not much! they are allowing crap as collateral in order to increase the loan eligibility beyond reason to Sub-Prime collateral if you wish :(


  24. I believe the point that JW is trying to make is that there is only one real place that all those owed the ‘monkey money’ will come to be repaid ..and that place is the taxpayer.
    One way or another, the ‘rent seekers’ and their fellow travellers have us well screwed down and we cannot or will not change anything until we get the money demands of modern political parties under control.


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