PIIGS Bank Deposits Outflow Accelerating

As I noted a month earlier, Spain's bank deposits posted an outflow and this outflow is accelerating for the month of May 2013. This time, Italy is posting outflows too.

Greece, Cyprus are of course still in a decline. I expect bail-ins to come if this trend continues. Europeans should be worried about their deposits.

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Bank Deposits Update: Spain is in trouble

Time for another bank deposit update for the month of April 2013.

Cyprus continued to have a bank run in deposits, but the most interesting event is that Spain's deposits are starting to deteriorate too.

Guess where the deposits are going to? Yes, Germany, France, Italy and even Belgium.

That means that money is flowing from the periphery into the center of Europe. I wonder how long this imbalance can continue.

Chart 1: Bank Deposits Periphery of Eurozone

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Bank Deposits Update

Remember the Cyprus debacle in March? We were worried about deposits declining.

In February, deposits declined in Cyprus, Ireland, Greece, Portugal. But they increased in Italy and Spain.

In March, we see the same happening again. So I don't see any significant changes. Maybe the Cyprus crisis was just a little drop in the sea.

Chart 1: Bank Deposits

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Bank Deposits Update

Latest data shows no deposit flight yet in February 2013. Greece did decline together with Portugal, Ireland and Cyprus. But Italy and Spain had deposit increases.

We'll see what happens in March 2013...

Chart 1: Deposits Eurozone

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Belgium deposits are not safe

I happen to live in Belgium and there are some people there arguing with me about gold. I keep telling them to buy gold but they insist not to buy it.

What they don't take in account is that Belgium is the next in line of the PIIGS. Belgium has one of the largest  debts in the Eurozone and has the highest taxes. As a result I don't think that higher taxes will be an option.

So the only other option is to take your deposits like in Cyprus. Belgium happens to have a lot of uninsured deposits ready for the taking (Chart 1).

With this chart I will have another argument up my sleeve. Of course I already prepared myself by taking all my money out of the bank.

Chart 1: Large deposits and uninsured deposits

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Correlation: Deposits Vs. LTRO: How to monitor deposits of Eurozone banks

Now that everyone is scared of the bank runs, it is necessary to monitor the deposits at the peripheral countries.

The data is available at the ECB site:

I compiled the data for the most important countries to watch, namely, the PIIGS. And of course Cyprus.

Chart 1: Total Deposits of Peripheral Eurozone Countries

If Cyprus falls, let's see what will happen to the PIIGS. Probably they will fall too.

I will give a monthly update on this.

I challenge you: do you see a correlation here between deposits and something else?

Yes, it's the ECB's LTRO lending to banks (Chart 2). The country that gets the most LTRO will have the most deposits on their banks. That's because most of the deposits just stay on the balance sheets of the banks. Normally loans should go up, but that's not the case anymore since 2008. The deposit to loan ratio is going up (Chart 3).

Chart 2: ECB Lending to Banks

Chart 3: Deposit to Loan Ratio U.S. Banks

If all people take their money out of the bank, we get a bank run. Result is that the loans will disappear and go bad. We get an entire collapse in the financial system. So I expect to see LTRO coming back soon as Chart 1 tells us that deposits are again decreasing.

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ECB Overnight Deposits Drop by more than Half

As I already predicted in this article, the ECB overnight deposit dropped. It didn't drop by a bit, it dropped  in HALF and it's not a glitch.

Now where will this 500 Billion Euro go, I wonder. I'll keep you posted, stay tuned.

They could go to: bonds, gold, real estate, land, overseas currencies.

500 billion euro is not a little bit of money, it is huge. The financial stimulus in 2008 was comparable to this 500 billion euro. You can buy a lot with this money. Deutsche Bank is only 20 billion euro in market cap. The whole silver market is only worth 20 billion euro. Even Citigroup is worth only 50 billion euro.

So I expect something big to happen in the equity markets and especially in the precious metals market.

Chart 1: ECB overnight deposits

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How Likely is QE3? 70% likely.

Ben Bernanke has been saving his ammo in the past months. Each time the fed meeting was held, markets were hoping for QE3, but they didn't receive any. This is evidence by the U.S. federal reserve balance sheet on Chart 1.

Chart 1: U.S. Federal Reserve Balance Sheet

Today, we have passed several months and we already see that the economy is starting to deteriorate. Not only in Europe and the emerging markets, but especially in the United States. In this article I will focus on the key macroeconomic data in the U.S.

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