From Zerohedge

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When yesterday we presented the view from CLSA's Chris Wood that the February 29 LTRO could be €1 Trillion (compared to under €500 billion for the December 21 iteration), we snickered, although we knew quite well that the market response, in stocks and gold, today would be precisely as has transpired. However, after reading the report by Credit Suisse's William Porter, we no longer assign a trivial probability to some ridiculous amount hitting the headlines early in the morning on February 29. Why? Because from this moment on, the market will no longer be preoccupied with a €1 trillion LTRO number as the potential headline, one which in itself would be sufficient to send the Euro tumbling, the USD surging, and provoking an immediate in kind response from the Fed. Instead, the new 'possible' number is just a "little" higher, which intuitively would make sense. After all both S&P and now Fitch expect Greece to default on March 20 (just to have the event somewhat "priced in"). Which means that in an attempt to front-run the unprecedented liquidity scramble that will certainly result as nobody has any idea what would happen should Greece default in an orderly fashion, let alone disorderly, the only buffer is having cash. Lots of it. A shock and awe liquidity firewall that will leave everyone stunned. How much. According to Credit Suisse the new LTRO number could be up to a gargantuan, and unprecedented, €10 TRILLION!

http://www.zerohedge.com/news/10-trillio....


I enjoy reading ZH posts, but their comments are all over the place and hard to follow any serious discussion. I am curious how the MT folks see this and its implications.

Quadrillion is the word you're looking for.

I guess 10 trillion would help kick the can a long way.

Oh please.

And by the way, they are not talking $10 trillion, but 10 trillion EUROS. How do you like dem apples, and WHERE IS THE MONEY GOING TO COME FROM?

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WHERE IS THE MONEY GOING TO COME FROM?

A good question for Johannes Gutenberg.

Heh... that they are even having that discussion - LOL - try it - go ahead, I dare ya.

THe alternative is bank runs and massive defaults so don't put it past them trying to pull the trigger on this.

We either print and monetize or default and restructure. Let's hope it's the latter.

AT this point it's pretty obvious they are going to TRY the former - good luck with that...

The other day I was peering through the supermarket freezer cabinet window... in it there was a lil' box of frozen corn dogs. Four of them. It was the 'Gluten Free' healthfood section (admittedly).

$16.99

I gasped... but quickly realized, that was a vision, an offering from the future if you will... of the price of a box of regular corn dogs.

Four of them.

Seems far-fetched to me to say the least. Does the European banking system even have 10T Euros worth of slightly-better-than-junk unencumbered collateral to post for the upcoming LTRO? LOL! I'm not so sure... 1T Euros I could see perhaps

Ha- "collateral" is so... last crisis, get on the board for the big win!.

I think they're planning on rehypothecating the United States.

I double-dare them If they do, it'll be obvious that they're simply printing, and the cost of commodities will shoot thru the roof very quickly. Unlike Weimar, no wages will be keeping up with that price surge. Over in Europe, the pitchforks and torches WILL come out very fast when the vast majority of the populace can no longer afford food or energy, and I'm sure they'll know exactly who deserves their "attention".

The cost of commodities is the ONLY thing, IMO, that will restrain TPTB, as they will have woken up all the sleeping populace if they are THIS stupid.

This would instantly gork our manufacturing.

Yeah Dan it would - until the Europeans burn their continent down, then we're back in the saddle baby until happens here, about a week later....

US manufacturers couldn't hold on that long. The only way to prevent that is to trash the dollar.

Shooting for par with the yen?

There is a lot of money betting on the printing scenario. Some of the smartest people in the room are starting to lean this way from what I read.

I don't think it matters. It's game over either way within a year or two. If they print its game over because no one will be able to afford the inflation which means demand will collapse.

If they don't print then many banks collapse and the financial system will eventually follow. It would be less painful of a collapse but a collapse nonetheless.

I really see now way out for these CB clowns.

Sad.

They can't possibly be THAT stupid can they? Please, please, please tell me they're not this dumb... because otherwise....

TheEdge wrote..

There is a lot of money betting on the printing scenario. Some of the smartest people in the room are starting to lean this way from what I read.

Yup; big companies like Google and Samsung sitting on piles of cash are floating bonds. Why? To hedge the cash. I bought a house in Florida last year. I could have paid cash for it but elected not to for the same reason.

TheEdge wrote..

If they print its game over because no one will be able to afford the inflation which means demand will collapse.

Printing would delay the collapse. Inflation would not take hold instantly, and the lag until it really hurts would be even longer.

-Uwe-

10 Trillion would send Gold and Silver through the ROOF. Hard to believe since its 10X the current circulation. The big question would be how do they inject this into the economy. Its possible they loan it to the bankster to hold like Ben did.

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Yup; big companies like Google and Samsung sitting on piles of cash

Or maybe they're really not. Or maybe the 'cash' is really stuck in vendor finance schemes like you saw in the networking equipment sector circa 1999-2000 (Lucent, Nortel, Cisco, etc.).

With the accounting used by a lot of these social media companies, the lack of dividends, poor transparency to the taxation authorities, and tragically flawed business models (ie: Groupon), etc., its really anyone's guess.

For the amount of cash those firms (and others) apparently have on hand, you'd think that the execs and employees would be robbing them blind with cash compensation. Yet there's not many examples of this happening and tech sector salaries aren't exactly very high. Makes you really wonder what is going on. Again, maybe the cash to rob simply doesn't exist -- can't rob an empty bank and get anything out of it after all!

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If they print its game over because no one will be able to afford the inflation which means demand will collapse

Plenty would be able to afford the inflation, ie: producers, who will be able to cite monetary instability for increasing risk premia on their output and accelerated payment terms rather than long-term credit. The banksters (and their supporters, ie: the wealthy elderly) would be the big losers under an inflationary scenario, would they not?

The past 30 years of deflation has allowed us to get to this point, ending with the 2008 hyper-deflation. Inflation, IMHO, will serve as somewhat of an antidote. As usual, hopefully they don't let it get out of hand, but I have my doubts...