By Karl Denninger
The ECB failed to auction the €55bn in fixed term deposits it had planned to, and what it did auction (€31.86bn) was at a much-higher rate (0.54 per cent) than what it offered at the start of its Securities Markets Programme (SMP). The market seems to be holding tight to liquidity.
The wall has been hit.
This is a clear warning to the money-printing screamers (of which there are many adherents) and the “we can do this without impacting aggregates” crowd (commonly known as Central Banks with God complexes.)
Sadly, as I have repeatedly pointed out, all Ponzi Schemes fail, and they fail at the most inopportune time, after you have spent the proceeds of your previous scamming and thus lack the ability to deal with the failure to sell your latest batch of whatever it is you’re attempting to do.
Oh, and by the way, it gets better. Much better.
See, the ECB has a rollover problem coming, in that they need to roll a significant amount of term liquidity deposits Thursday.
If those rolls fail, the markets will crash. Both credit and equity.
If the ECB tries to machine it’s way around a failure the results could be cataclysmic.
I have warned for over two years that these BS games played by the various governments and central banks WOULD NOT WORK and in fact CANNOT, mathematically, work.
We had to force these institutions to go under two years ago. We had to force them to fail back in March of 2009, rather than legalize accounting fraud. President Obama had the opportunity to take the medicine and accept it, but in the process of doing so clean the system and ensure it’s survival.
But doing so meant JAILING the “captains of industry” that had created this mess (including Bernanke and Gethner), repudiating the “pension promises” that cannot be kept for those public-sector union crooners including police, firefighters and teachers, and telling the neo-Keynesians like Larry Summers (who incidentally took a damn good run at bankrupting HARVARD!) to get stuffed.
Now we pay for the hubris of people like BEN BERNANKE, HANK PAULSON, TIM GEITHNER, PRESIDENT OBAMA, SARKOZY and the CEOs and boards of major national and international banks that have goaded and prodded the respective governments into attempting to protect them from the consequences of their own greed and stupidity while literally robbing the public, municipalities and states BLIND.
Our refusal to FORCE Congress and the Administration to JAIL the lawbreakers and BANKRUPT their firms has DOUBLED the economic damage that must now be absorbed to clear the system.
IF WE DO NOT STOP THIS BS SOON THE COLLAPSE WILL COME **HERE**.
If you listened to Dennis Kneale, Larry Kudlow and the other cheerleaders at CNBS and elsewhere who called “Pax Americana”, you deserve what you are about to get.
Game’s up folks.
I told you so.
PS: Oh Dennis and Larry? Game for a rematch on air with a few facts and charts? You guys need to both go the local courthouse and change your first name to “Charles.” Last name? PONZI.