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Panic Or Tension In The Euro Money Market?

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http://www.bloomberg.com/apps/news?pid=206...&refer=home

Aug. 9 (Bloomberg) -- The European Central Bank said it will launch an unlimited fine-tuning operation today to add liquidity at 4 percent after demand for cash in the European money market drove interest rates higher.

``This liquidity providing fine-tuning operation aims to assure orderly conditions in the euro money market,'' the ECB said in a statement today. ``The ECB intends to allot 100 percent of the bids it receives.''

Earlier today the bank issued a statement saying it ``notes that there are tensions in the euro money market notwithstanding the normal supply of aggregate euro liquidity.'' The Frankfurt- based bank ``is closely monitoring the situation and stands ready to act to assure orderly conditions in the euro money market.''

...

``Every bank is being suspected now, so no one is willing to lend money to anyone.''

Oh dear. We talk overnight rates up to 4.7% here, while the base rate is 4%. Pushing the string!

It's contained, isn't it?

Edited by Goldfinger

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http://www.bloomberg.com/apps/news?pid=206...&refer=home

Oh dear. We talk overnight rates up to 4.7% here, while the base rate is 4%. Pushing the string!

It's contained, isn't it?

Again Oh dear!

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Lending Rates Rise, Overnight Dollar Libor Surges

The British Bankers Association said the overnight lending rate that banks charge each other to borrow in dollars rose to 5.86 percent today from 5.35 percent.

The so-called London interbank offered rate in dollars is the highest since the start of 2001.

The benchmark borrowing rate is rising on concern banks face growing losses on investments linked to U.S. mortgages. The European Central Bank said today it is ``closely monitoring the situation and stands ready to act to assure orderly conditions in the euro money market.''

``Liquidity in the market has completely dried up as investors aren't recycling their money back because of subprime concerns,'' said Saher Bin Jung, a trader on the commercial paper desk at Commerzbank AG. ``Levels have shot up dramatically since yesterday as issuers are trying to entice investors back.''

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Again Oh dear!

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Lending Rates Rise, Overnight Dollar Libor Surges

The British Bankers Association said the overnight lending rate that banks charge each other to borrow in dollars rose to 5.86 percent today from 5.35 percent.

The so-called London interbank offered rate in dollars is the highest since the start of 2001.

The benchmark borrowing rate is rising on concern banks face growing losses on investments linked to U.S. mortgages. The European Central Bank said today it is ``closely monitoring the situation and stands ready to act to assure orderly conditions in the euro money market.''

``Liquidity in the market has completely dried up as investors aren't recycling their money back because of subprime concerns,'' said Saher Bin Jung, a trader on the commercial paper desk at Commerzbank AG. ``Levels have shot up dramatically since yesterday as issuers are trying to entice investors back.''

But all is ok, it dont hurt, we can with stand it.

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Guest DissipatedYouthIsValuable
But all is ok, it dont hurt, we can with stand it.

"We don't want no steenking dollahs"

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"The European Central Bank said it will launch an unlimited fine-tuning operation today to add liquidity at 4 percent after demand for cash in the European money market drove interest rates higher.

``This liquidity providing fine-tuning operation aims to assure orderly conditions in the euro money market,'' the ECB said in a statement today. ``The ECB intends to allot 100 percent of the bids it receives.'' "

Sorry, I must be a bit thick today.

Does this say that the ECB will lend unlimited funds below the rate set by the markets assessment of risk?

And that they will comply with any and all requests for credit?

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Whoooa! The ECB helicopters are flying in and bundles of cash dropping everywhere.

Wholesale markets do not want to lend at all, Eurocurrency interest rates going through the roof and money not being recycled but being put straight into safe Government Bonds.

This is bad very very bad.

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Whoooa! The ECB helicopters are flying in and bundles of cash dropping everywhere.

Wholesale markets do not want to lend at all, Eurocurrency interest rates going through the roof and money not being recycled but being put straight into safe Government Bonds.

This is bad very very bad.

Is this a bad time to be holding Euros?!

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Is there a precedent for this sort of thing? There seem to be a series of mini-saves, but each one seems to be more of a finger in the dyke exercise.

Dead right there is.

The Secondary Banking Crisis in the UK (1970s), Savings and Loans Crisis in the USA (1980s), Asian Crisis (1990s).

EDIT: Woops .. forgot to mention the US banking collapse of the 1930s.

Edited by Wad

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Aug. 9 (Bloomberg) -- The European Central Bank said it will launch an unlimited fine-tuning operation today to add liquidity at 4 percent after demand for cash in the European money market drove interest rates higher.``This liquidity providing fine-tuning operation aims to assure orderly conditions in the euro money market,'' the ECB said in a statement today. ``The ECB intends to allot 100 percent of the bids it receives.''

Earlier today the bank issued a statement saying it ``notes that there are tensions in the euro money market notwithstanding the normal supply of aggregate euro liquidity.'' The Frankfurt- based bank ``is closely monitoring the situation and stands ready to act to assure orderly conditions in the euro money market.''

...

``Every bank is being suspected now, so no one is willing to lend money to anyone.''

This was to be expected.....is this the last trick they have up their sleeves? Doesn't the lender of last resort putting cash up because they can't find anyone else to lend, not suck all the confidence out of the market? I mean what kind of message does this send out FFS?

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I think we need a bigger headline for this thread,

They are doing it again

They are cheating the system by selling money for less than it is worth.... The money that you have saved is now decreasing in value and the value of houses "relative to that cash" is going up. If this keeps up

We are all f******

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So perhaps someone can explain to me, where does this money the ECB are lending come from? Tax payers... or is it just created out of thin air thus stoking inflation by devaluing the currency?

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the ECB have just put $94 billion in.

this is central bank money, they can create as much of it as they want (technically)

as ECB is targeting monetary aggregates growth, they will surely take this money back.

As this money is lent out probably in short 2 week repos or stg similar, they will just not renew it at maturity.

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just created out of thin air thus stoking inflation by devaluing the currency?

sounds about right.

Not sure what the implications for the UK are....or those planning on a credit crunch any time soon

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lenders of last resort ie central banks only do this if there is a crisis,

(collapse) A to help the economy B if some one is about to collapse because they have too much risk.

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Aug. 9 (Bloomberg) -- The European Central Bank, in an unprecedented response to a sudden demand for cash from banks roiled by the subprime mortgage collapse in the U.S., loaned 94.8 billion euros ($130.2 billion) to assuage a credit crunch.

http://www.bloomberg.com/apps/news?pid=206...&refer=home

BIG NEWS.

Edited by Goldfinger

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lenders of last resort ie central banks only do this if there is a crisis,

(collapse) A to help the economy B if some one is about to collapse because they have too much risk.

i agree this must be big.

these bnp funds are said to be worth 2 billion, so why the $94 billion?

btw, the $94 billion number is now being reported on cnbc.

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Whoooa! The ECB helicopters are flying in and bundles of cash dropping everywhere.

Wholesale markets do not want to lend at all, Eurocurrency interest rates going through the roof and money not being recycled but being put straight into safe Government Bonds.

This is bad very very bad.

I agree with you, this is very bad, it is IMHO the first sign of serious stress in the market. I think today could be the biggest fall in the stock markets since the Dot Com bust.

Nothing creates more fear than unnatural intervention of the central banks, the ERM debacle for the pound shows that very clearly.

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