by Mish

Capital flight is ongoing in Spain, Italy, Greece, France, and Portugal in that order. The recipient countries are Germany, Luxembourg, Finland, and the Netherlands in that order.

Some charts and tables will help provide a clear picture.

Data for the following charts and tables is from ECB Target Balances, a measure of capital flight. Neither the ECB nor Eurozone officials likes to discuss these numbers for obvious reasons.

The ECB-generated chart below shows Target2 changes over time. However, tracking 20 lines by colors is more than a bit problematic.

Here is the ECB’s chart with my annotations in blue. My charts and tables follow.

February Target2 Balances

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The above chart shows where the money is coming and going, and by how much.

Cyprus actually has the 5th largest positive balance (thanks to capital controls and forced bail-ins). A few other countries have positive balances, and there are other countries with smaller negatives.

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Monthly Changes in Billions of Euros

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Aggregate Changes

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Comments

  • The six-country negative sum for February is -€841.04 billion.
  • The five-country positive sum for February is +€885.78 billion.
  • Since the numbers total zero, the rest of the imbalance is spread out over the remaining eurozone countries.
  • In the last month, another +€52.37 billion fled the deficit entities to creditor countries.

Note the ECB itself sports a negative balance to the tune of -€98.16 billion. I don’t have an explanation for precisely how this happens.

Those needing a further explanation of Target2 may wish to consider Discussion of Target2 and the ELA (Emergency Liquidity Assistance) program; Reader From Europe Asks “Can You Please Explain Target2?”

The key point is the deficit banks and countries are insolvent. German taxpayers are going to bear the brunt of this mess when it implodes.

Mike “Mish” Shedlock

Another Look at Capital Flight in Italy and Spain: ECB’s Target2 Explanation is False

The ECB claims that Target2 does not represent capital flight. Evidence says the ECB is wrong, especially for Italy and Spain.

Eurozone Capital Flight Intensifies: Target2 Imbalances Widen Again

A quick perusal of Target2 Balances for January shows capital flight from Italy and Spain to Germany intensified again.

Capital Flight to Germany in Full Swing

Capital; flight to Germany, the Netherlands, and Finland is in full swing. These sums cannot be paid back.

Capital Flight in Italy, Spain Intensifies: Italy Target2 Balance Hits Record Negative

The ECB statistical data warehouse released Target2 Balance figures today. The numbers are reflective of intensifying capital flight in Italy and Spain.

Massive Cascade of Eurozone Defaults Coming Up

As soon as any major country exits the Eurozone (and possibly some lesser ones), a cascade of defaults, unparalleled in history will commence.

Italy Capital Flight Escalates: Highest Two-Month Total Ever

Capital Flight in Italy escalates at a record pace. It's seen in Target2 balances and spreads rather than an EM crisis.

German Investors Dumping Italian Bonds: Italy Increasingly Dependent on ECB, Target2 Capital Flight

Italy is increasingly dependent on the ECB to hold down bond yields as foreign investors dump Italian bonds like mad.

China Spotlight: Capital Flight Intensifies, US Treasury Reserves Plunge, Capital Controls Increase

A reader pinged me the other day about China “dumping” US treasuries.

Financial Fragmentation of the Eurozone in Pictures

Eurozone fragmentation is massive. Target2 imbalances are just part of the picture.