Wednesday, Dec 19, 2007
350bn is not enough
FT: Investors stunned by ECB’s €350bn
Why not 3 trillion and fix this problem once and for all? Hyperinflation is the only solution, the last thing we want is people living within their means! Weimar Republic here we come.
Posted by happyrenterz @ 10:15 AM (1172 views) Add Comment
9 Comments
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1. happyrenterz said...
Short-term market interest rates in the eurozone plunged at their fastest rate for more than a decade on Tuesday after the ECB stunned investors by pumping a record €348.6bn ($502bn) worth of funds into the markets. The amount was twice as big as the ECB had indicated would have been needed in normal circumstances. The bank said some 390 private sector banks in the eurozone had requested funds, which have been offered for two weeks at 4.21%, well below the previous prevailing market rate. The emergency operation, which followed last week’s co-ordinated central bank action, prompted the two-week euro Libor to fall a record 54bp to 4.40%, while one-month and three-month rates saw their biggest falls for nearly six years. Separately, the Bank of England also sought to offset market tensions via the first of its long-term refinancing operations, auctioning £10bn in three-month funds at a minimum rate of 5.36% – 14bp below the 5.5% base rate. Three-month sterling Libor fell for a fourth successive session. (http://ftalphaville.ft.com/blog/2007/12/19/9742/investors-stunned-by-ecb%e2%80%99s-e350bn/)
2. happyrenterz said...
Oh, those injections: Central bankers join doctors and junkies
It’s a chief pastime of doctors, junkies and, increasingly, central bankers - and it’s rapidly becoming a word we love to hate. So while this point was made a few days ago by Long or Short Capital, the continuing preoccupation among the world’s central banks with - er, “infusing” - vast sums of money into markets make this cheeky point even more relevant.
Why, asks Long or Short’s Mr Juggles, is liquidity only ever “injected”?
Maybe this is the problem with financials today. Injections are harsh and can hurt - I know I close my eyes whenever the doctor calls for an injection.
Maybe the Fed should try “pouring” some liquidity? My servants frequently pour hot water on my hair when I take my daily bath — it feels quite relaxing.
There are so many options with liquidity, he notes. What about “stirring”, “folding”, or “squirting” liquidity into the markets?
Ben… if something isn’t working, don’t just repeat yourself. Try a new method!
Suggestions on alternative words most welcome.
(http://ftalphaville.ft.com/blog/2007/12/19/9744/oh-those-injections-central-bankers-join-doctors-and-junkies/)
3. hpwatcher said...
Well, it's bucking the trend...but only for the short term.
4. renting2 said...
The term 'money-pit' springs to my mind!
5. Ictoa said...
I don't think this should be viewed as 'hyper inflationary' - it's not a permanent add of liquidity, it has to be paid back Jan 4th I believe.
6. paul said...
INJECT MORE MORPHINE!
(it won't cure the patient but it sure feelz gooood for a while ... )
7. planning4acrash said...
Well, looks like some kind of Bull market will be maintained for a few years yet. Till Dec 21, 2010, end of the Mayan calender anybody?!
8. Safeazowziz said...
I am sure I heard that about a third of this had been withdrawn today as the ECB was suprised by the demand foncethe funds were made available. If so then it suggests that the problem is even worse than the ECB thought and that they had their bluff well and truly called. 'you can have as much as you want.........as long as you don't really want it!'
9. drewster said...
If you don't have an FT login, try this link instead for the article:
- http://www.ft.com/cms/s/0/7ba8f586-ad5b-11dc-9386-0000779fd2ac.html
The sheer amount of money beggars belief. €350bn dwarfs the BoE's paltry £24bn rescue for Northern Rock; it dwarfs the Fed's puny $20bn coordinated injection last week. Surely there must come a point where it has an effect in the real world?