For those of you who don’t understand what this means: They flat out printed money in order to finance a failed bond auction.
The entire ponzi is coming to a head, and we now know it will end in Zimbabwe style hyper-inflation, for the euros at least.
Zero Hedge reports:
We have long mocked and ridiculed the Fed for being the ultimate ponzi instrument: after all, why worry, when your central bank will buy up almost three trillion in US paper in about 2 years (a very comforting fact for US politicians who never have to fear that those trillions in new porkbills, pardon fiscal stimulus programs, may end up without funding). Well, as it turns out those wily veteran bankers from across the Atlantic have just one upped America yet again. According to the Telegraph, the abysmal, and barely successful, 3 EUR billion issuance of EFSF bonds (which was originally supposed to be 10 EUR billion, on its very very gradual climb to 1 EUR trillion) had one more very curious feature to it, aside from confirming that it is Dead On Arrival as expected. It turns out that in addition to being the most convoluted and complex creation ever conceived by JPM which is advising Europe on coming up with structured finance products that are so complexnobody will ask any questions and will automatically assume someone else has done the homework, it is also the quintessential ponzi instrument. The Telegraph reports that the already reduced 3 EUR billion “target was only met after the EFSF resorted to buying up several hundred million euros worth of the bonds.” You read that right: in its first bond issuance since its transformation to the European Bank/Soveriegn Bailout Swiss Army Knife, the EFSF not only failed to raise a minimum token amount, but also had to...buy its own bonds. We can assume that the money the EFSF needed to fund said purchase came from the money growing tree, as at last check the ECB was still not funding the EFSF with crisp, new zEURq.PK equivalent binary 1s and 0s. But at least we all know what happens when the global ponzi goes full retard.