Acute Liquidity Crisis In Europe Confirmed As Borrowing Surge On Marginal Lending Facility Continues For Second Day

Tyler Durden's picture

The one thing that nobody is conveniently talking about that has suddenly become a big flash red light, the surge in borrowing on the ECB's Marginal Lending Facility which we noted yesterday, continues for the second day in a row, removing all speculation of this being a technical or calendar glitch, and confirming that some financial entity in Europe has entered its death rattle. Today, the ECB announced that after borrowing €15.8 billion in overnight liquidity, the highest since the program's inception in 2009, we got another increase in borrowing, this time at €16 billion in overnight liquidity needs. With expectations that this borrowing surge at a last resort rate of 1.25% would normalize disappearing, we are surprised the reaction in the EUR is not far greater: the EURUSD did contract modestly overnight, but if this is indeed the proverbial first domino we would be very concerned about the long term prospects of the European currency. What is most concerning is that after revelations of check kiting at Irish banks yesterday, which confirms that banks are using a legalized ponzi scheme to literally print each other money, that some bank - any bank - will need to resort to such a high rate source of overnight capital. As European collateral has no quality thresholds, and as the ECB will accept anything, it makes no sense for any bank to pay incremental interest just to transfer borrowing to an overnight facility with a punitive rate - simple as that. If this continues for a third day on Monday, it may well be time to follow Hugh Hendry's advice, and panic.

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HelluvaEngineer's picture

Tyler, I think the headlines that show up in your rss feed are probably too complicated for the trader bots to parse.

ZeroPower's picture

This is not the liquidity crisis you're looking for.

StychoKiller's picture

Wow!  I found $5 FRNs in my left pocket, I stuck them in my right pocket and now I have $10!  Bankin' is eezy!

The Axe's picture

This is the FDX market!!!!    warn   stock goes fucking up... The central banks have a fucking loins death grip on the world's markets....Ain't going no WHERE!!!

Modus's picture

thanks for putting that up that soon after the post was made by tyler.

read that yesterday on ftalpha as well...

The Axe's picture

very helpful link HTFAN123  thx

SloaneSquare's picture

From an Irish source - "This will also be here on monday and is not a fat finger"...Let the good times roll.

johnQpublic's picture

 time to follow Hugh Hendry's advice, and panic.

sounds like a simpsons quote


 Kent: Hordes of panicky people seem to be evacuating the town for
       some unknown reason.  Professor, without knowing precisely what
       the danger is, would you say it's time for our viewers to crack
       each other's heads open and feast on the goo inside?
Prof.: Mmm, yes I would, Kent

Henry Chinaski's picture

dominoes  bitchez

                   m  e
                e               e
             r                   u                u
           g                    r                 n
          i                      o                i
        n                       p                t
        g                       e                e
      m                        a                d
     a                          n                s
     r                           u                t
    k                           n                a
   e                            i                 t
  t                             o                e
s                               n                s

smlbizman's picture

i know this is off topic, but if it appears that our ship is sailing ....i will admit i know the least of every person on zero hedge, but apmex is buying back over spot.....this is really good , correct?

saulysw's picture

That is a zero based graph, for once. It doesn't look good....

Dick Darlington's picture

And ECB buying Portugal now. Just this morning Portugal made a statement for the 100th time that they don't need external assistance. What a joke.

MarketTruth's picture

<s> Can't they just fraudulently lend each other billions of Euros in a Round Robin facility like in other EU countries? Thus, problem solved. </s>

Or perhaps it is those paper silver shorts being fried by the physical market?

jesse livermoore's picture

is this a prelude to a bank run in europe?

qussl3's picture

EUR going nuts, WTF

qussl3's picture

This BS spike for however long it lasts is going to be a nice fade.


Raising rates while, they lend the left pocket money from the right pocket, riighttt.

Josh Randall's picture

What happened to the Europe/Delta I used to know ?

gaoptimize's picture

"(Irish) banks are using a legalized ponzi scheme to literally print each other money"

Why wouldn't there be a bank run on such information becoming public?

EscapeKey's picture

You seem to be under the mistaken belief that the majority of the sheeple a) understand this information, b) prioritise it above Beyonce's new hair style, c) remember it 5 minutes after being told.

Anyway, it's been my impression that the majority of people don't want to hear bad news, and if told, will do everything to trivially discredit it.

Founders Keeper's picture

[Anyway, it's been my impression that the majority of people don't want to hear bad news, and if told, will do everything to trivially discredit it.]---EscapeKey

Isn't that the truth. It's amazing, from a psychological/human-nature point of view, the lengths people will go to avoid learning of imminent uncontrollable danger. 

I will be disappointed in myself if I ever utter "I told you so."

I hope instead, when the time comes, I will simply offer help to those in need. Share what you can spare. And thank God for lending me the foresight and means to prepare.


uranian's picture

normalcy bias seeming to be a bit of ZH buzzword, a good example i read of the phenomenon; a group of people are living downstream of a dam that is known to be structurally unsound. logic would suggest that the closer you live to the dam, the greater anxiety you would feel. the reality for these people was that the closer they lived to the dam, the less anxiety they felt, because to do anything other while living next to a dam that might collapse any moment than deny that would cause panic. you could of course just move freakin' house, but you might miss beyonce's latest haircut at that point, so that's a no brainer, too.

Dollar Bill Hiccup's picture

Look at EURUSD this morning (just as someone gets to their desk in NY rather early).

No problem here, move along folks ...

irishlink's picture

What is poor Switzerland going to do with all the money moving across its borders?

Doeko's picture

Looks like someone used the wrong facility by accident. Someone will probably have their bonus cut.

ZeroPower's picture

We should know by Wednesday either way.

Matt's picture

so .. what's the best trade on this situation?