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Who's Tapped The Ecb For $500M For 7 Days At 1.1%

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ECB%207%20Day%20OT.jpg

http://www.zerohedge.com/news/behind-scenes-liquidity-scramble-europe-one-bank-borrows-500mm-emergency-cash-ecb

So the conventional herd wisdom is that following last week's near implosion, Europe is now suddenly supposed to be fixed? Perhaps. Perhaps not. According to the just released results of the ECB's tender operation for emergency 7 day liquidity, arguably the closest the ECB has to a dollar denominated discount window (and the associated stigmata upon borrowing), just one bank borrowed $500 million in a 7 day liquidity providing operation at a 1.1% rate. Why is this notable? Because as the chart below indicates, there had been no borrowing under this facility since March 2011, and the last time there was a sizable borrowing under the 7 Day OT was back in May 2010, when Europe was blowing up for the first time and the ECB was scrambling like a headless chicken to contain the contagion fires.

....

ECB%207%20Day%20OT%20Snap.jpg

http://ftalphaville.ft.com/blog/2011/08/17/655601/a-dollar-bidder-at-the-ecb/

So is this the first signs of a major liquidity crisis or just someone needing a bit pin money for a couple of days?

Plus who's needing the money? French or Italian bank?

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ECB%207%20Day%20OT.jpg

http://www.zerohedge.com/news/behind-scenes-liquidity-scramble-europe-one-bank-borrows-500mm-emergency-cash-ecb

http://ftalphaville.ft.com/blog/2011/08/17/655601/a-dollar-bidder-at-the-ecb/

So is this the first signs of a major liquidity crisis or just someone needing a bit pin money for a couple of days?

Plus who's needing the money? French or Italian bank?

"I'd put it on the black...although I fully agree the red can be just as good," said the former head of Lehman's as he put down his cut glass of rye and sodem. "Makes you realise just how easy it is to press a button and get an electronic credit...if you're a central bank that is," he coughed, his guard quickly rising again.

Edited by plummet expert

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am i missing something

Money don't matter 2 nite

And it sho didn't matter yesterday

Just when you think you got money enough

That's when it all up and flies away . . .

(Rumoured. ECB to hire Prince as consultant)

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Plus who's needing the money? French or Italian bank?

Sorry, that as me. Wanted £500 out of the ATM but left my finger on the 0 whilst the kids were distracting me. It's taking ages putting it all back via those little deposit envelopes, should be done by Christmas.

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Sorry, that as me. Wanted £500 out of the ATM but left my finger on the 0 whilst the kids were distracting me. It's taking ages putting it all back via those little deposit envelopes, should be done by Christmas.

:lol::lol::lol:

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American regulators are concerned at European banks' ability to fund "day-to-day operations"

I like that phrase, it suggests they are going bust real soon. Should those American regulators now be locked up for 4 years for inciting a bank run?

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http://www.lovemoney.com/news/the-economy-politics-and-your-job/the-economy/3909/why-lehman-brothers-collapsed

2. Liquidity

Most businesses fail not because of lack of profits but because of cash-flow problems. Like all banks, Lehman was an upturned pyramid balanced on a small sliver of cash. Although it had a massive asset base (and equally impressive liabilities), Lehman didn't have enough in the way of liquidity. In other words, it lacked ready cash and other easily sold assets.

As markets fell, other banks started to worry about Lehman's shaky finances, so they moved to protect their own interests by pulling Lehman's lines of credit. This meant that Lehman was losing liquidity fast, which is a dangerous state for any bank. Only six months earlier, in March 2008, Lehman rival Bear Stearns faced a similar loss of liquidity before JPMorgan Chase rode to its rescue.

Believing that Lehman did not have enough liquidity at hand, other banks refused to trade with it. Once a bank loses market confidence, it loses everything. Being unable to trade meant that Lehman and its business ceased to exist in other banks' eyes.

I'm sure we won't be seeing a repeat of this again.

Not sure what either the US or UK govt could do if we see banks failing again. There only real option is to print the cash but at the risk of triggering hyperinflation which would defeat the point of printing the money.

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http://gramercyimages.com/blog1/2011/04/05/is-g-e-the-real-reason-paulson-panicked-in-the-aftermath-of-lehman/

....

Kashkari:

“We were getting calls from large American businesses, blue-chip businesses, saying they couldn’t fund themselves, they couldn’t make their payroll, they couldn’t fund their inventory.”

Now, there are a couple of ways to read this. On the one hand, he could just be lying to cover for the fact that he wanted to save his banker buddies (we’re assuming he has some). On the other hand, he may just remember hearing rumors, from somewhere(?), about somebody having problems. But on the third hand, I suspect he knows exactly which large, blue-chip American business he’s talking about, and what he really meant to say is, G.E. Because it was Jeff Immelt, remember, who was calling up Hank Paulson back in those halcyon days, saying “Save me, save me.” It was G.E. (or what I like to call, “that large, blue-chip American finance company known as G.E.”) that, of all the so-called non-financials, was in the most trouble.

Crazy thing is, that the CP market during the crisis isn’t much different from the inter-bank market. There are clear signs of stress, and borrowing moved to the very short term, but there was never a systemic meltdown, freeze-up, etc. (Unless, apparently, your name happened to be G.E. or Citi.)

Here’s total non-financial Commercial Paper outstanding during the crisis period. Nothing terribly unusual except that the entire market begins to shrink as the recession wears on and companies (like G.E.) began taking full advantage of the Temporary Liquidity Guarantee Program to issue govt.-guaranteed bonds. The real decline in total CP outstanding begins in early 2009, not in the immediate wake of Lehman.

And if this is liquidity crisis part deux will the very same companies that ran into trouble in 2008/09 be in the same position again or will they have unwound their positions? If GE was in trouble last time and the inter bank market freezes again will they be in trouble again along with other global non financial companies?

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Here are some thoughts on who it was and what the consequences may be

Other signs of trouble US dollar borrowing in Europe

This may seem innocent but let me pose it to you as a question. Why does a European bank need to borrow 500 million US dollars from the ECB when it can borrow all the Euros it wants if it has collateral? Presumably because it cannot borrow in US dollars which is worrying as I am sure everybody reading this is asking why not? Exactly.

In itself this is not a sign of impending apocalypse but it is a worry as it has echoes of 2008. And as I am sure you are wondering I think that the three likeliest candidates are Dexia, Societe Generale and Unicredit.

I notice that in a not entirely unrelated development the Wall Street Journal is reporting that the US central bank the Federal Reserve is making extra checks on European banks which operate in the US.

http://t.co/Qo8Oy5M

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Doesn't bode well.

Emergency borrowing never does.

There was that incident where it was an accident once. Remeber the guy who entered too many zeros or whatever. That caused a spike that shouldn't have been.

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If I remember rightly there were similar happenings just before Northern Rock blew up, wasn't there?

Another question has just occured. I read somewhere that a banks share value contributed to its solvency because it affected how much it could raise via a share issue. So could this bank be under pressure because of the battering bank shares are currently taking?

Edited by FTBagain

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  • 338 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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