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European Funding Worst In A Year
EUR Libor at 0.83063%, Euribor at almost 0.9%, and top tier European Commercial Paper are now at their worst levels since about a year ago. The stress test came and went, and the market couldn't care less. And this is despite the ECB's latest monetary operation, in which E23.2 billion was allotted in a 3-month long term refinancing operation (LTRO): the intervention failed to prevent the ongoing EUR Libor surge. It is starting to get very troubling for Europe, where banks, knowing all too well that only the ECB is the INDISCRIMINATE lender of first an last resort, refuse to lend to anyone else as without the primacy example of some other private party taking the first loss risk tranches, there is no incentive to go out and lend. In other words, the longer the ECB remains entrenched in the money market, the worse it will get. All of Europe is now caught in a pan-continental liquidity Catch 22, in which more intervention will just make the central banks even more critical to the continued functioning of the financial sector.
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must...keep...euro...above...1.30 (!)
Anyone short the euro......
http://www.mannythemovieguy.com/images/total_recall_remake.jpg
until they go out with a BANG
Bingo!!!
And if the Southern EU goes austere ... expect a full on 'freeze'.
Question though: did the Swiss CB start selling the Euros at a buck twenty nine ($1.29)?
Those Swiss are a wild card (or a joker) in all this.
1.3267 will be tested
It's fun climbing the French alps!
oil and gas - huge builds
"a pan-continental liquidity Catch 22, in which more intervention will just make the central banks even more critical to the continued functioning of the financial sector."
Spot on. Well said. Clearly the plan. Painful.
Interventions sound painful.
ORI
http://aadivaahan.wordpress.com
Meanwhile, the Euro remains pinned at the highs.
And REIT stocks are flirting with 52-week highs.
not for long
Tyler, I just went to look at it, the repo rate is going up faster it seems than the normal euribor rate, so how should we interpret this? it means that rates are raising, but during the last moments of crisis, the euribor rate would do up faster than the repo rate...
I'm getting seriously scared now...
Market should be green should so that should assuage your fears. Pay no attention to the dying American economy.
Pardon John? Don't understand.
Sarcasm. Just trying to point out how ludicrous it is with builds in inventory, terrible consumer confidence, irrefutable proof that a double dip is on the door step and a job market that is not only NOT going to reverse but become worse than most envision that their is even a bid in the market at these levels as if stocks are haven for capital with bonds as this level. In some back room somewhere in D.C. they are convinced that Americans will correlate the strength of the economy to the stock market.
S&P 1000 and Dow 10,000 are a matter of national security at this point.
But I wonder who they're trying to sucker, I do not believe the baby boomers will come back, the teens are buying iphones with borrowed money and the folk in between are busy trying not to go in to foreclosure...
Yeah I believe at this point they know they are the only participants and the objective is to assets and securities as inflated as possible and the Fed is complicit in their price fixing endeavors. It is past conjecture at this point in my opinion. For this reason the biggest concern for Wall Street and the Federal Reserve was a full Fed audit which would undoubtedly tie them to active equity market participation. This is why housing still is eroding because as much as they might try to reflate with ZIRP, low mortgage rates, tax credits and held back inventory they still do not possess the power to manipulate housing since it is too broad and diverse.
Equities however with them possessing the majority of the inventory across the board can be manipulated since they and the Fed are doing their best to remove risk from the markets which will only last for so long. In March 2009 their goal was to use every tool available to reflate the markets and prevent the Wall St business model of past from becoming obsolete but it is rapidly becoming so because of the mistrust created. Another problem with their logic was that this was like all other bubbles and could be reflated and that they would simply purchase every security they could along with the Fed and sell years from now slowly distributing into the formation of the new bubble. Unforunately they used up the retail trick when Wall Street used Jim Cramer and created a show specifically designed to make retail participate in the ever rising stock market.
They needed a new bag...they were losing out on lucrative commisions as online trading began to rise in popularity hurting their margins and sound investment gave way to unseen leveraged trading. The bubble is not coming back.
But didn't I just see an article yesterday that the default spreads on the Euro sovereigns dropped a bunch since they are all relieved that the stress tests came back all lollipops and unicorns fantasy fantastic?
That seems to be telling the opposite story.
1% will be the back breaking event, just a matter of little time. Repeats of history are all too common.
All of Europe is now caught in a pan-continental liquidity Catch 22, in which more intervention will just make the central banks even more critical to the continued functioning of the financial sector.
Precisely as designed.
Serious question here. What would prevent the ECB, Fed or any central bank from continuing the farce we see day to day? Under what scenario, would those CB's throw in the towel?
ECB can keep zombie banks alive, on this life support, for as long as other nations agree. However, Germans aren't famous for their liking for throwing money away.
When the problem is a country not a bank, the ECB is relatively helpless. And when the problem is solvency not liquidity, then the ECB may have its hands tied.
Say, hypothetically, Greece defaults - its banks are then pretty much completely bust. Will the Germans allow the ECB to dive in with even more cash?
Note the EFSF, the stability fund, is not pre-funded. The money doesnt actually exist. And who requested this? Germany....
They will never throw in the towel, but they can't continue the farce we see today indefinitely.
http://research.stlouisfed.org/fred2/series/TOTBKCR?cid=101
In the real world growth can't accelerate exponentially like it must to service credit expansion.
the only way out of this for the scumbag oligarchs and their scumbag henchmen in government is through controlled catastrophe
they need to control the catastrophe in order to remain in control of its resolution
when these markets crash, it will be according to their script
sick shit
This is a plane crash into the ocean. It may float...for a bit.
I've never bought into the NWO, planned catastrophe story. The amount of planning, of nearly prescient foresight, the sheer number of balls in the air, it's impossible. If anything, these events are proof that central planning, to the largest degree ever tried, has been a complete and abject failure.
So the ECB's freshly printed euros are not going into the interbank market as intended - instead they are fed straight into the accounts of the hedgies and prop-desks to support the euro then? The euro is the only paper asset not falling today.
What Yoyos are being printed are being kept by the large banks - they know the smaller banks are mostly fucked.
Yes, I am short the Euro above 130 - and really nervous!
Credit is contacting in Europe forcing the ECB to be the First, Last, and Only Lender of resort for rolling over loans and means of capitalizing banks. Thus the lack of capital formation is forcing the ECB to become seignior and provider of credit. There is coming a day soon where Finance Ministers and State Leaders are going to have to take their hat and cup in their hat to Mr. Trichet and request loans to their nations banks so that the strategic needs of the continent can be met. The ECBs 3-month long-term refinancing operation is federalizing the banking system of Europe, and creating a unitary banking, lending and credit authority in the President of the European Central Bank.
3 weeks saying that the market will plunge and... still going up...
as binomial distribution it should go down... and you will be right...
Here it is. Doesn't this conflict with Tylers post? I agree the disaster is imminent but these are saying 2 different things. Or are the instruments mentioned in the article causes incorrect. Like hedge funds are selling the protection to lock in gains and buy something with a shorter time frame? I'm grasping...little help.
http://noir.bloomberg.com/apps/news?pid=20601087&sid=aTikuk0lQtSI&pos=7
Thanks for the contrast.
the mite euro hasn't closed at 130 yet if I'm not mistaken? Intraday only.
Would like to borrow 1 mil euros, in Chf's then deposit in Pounds
The modrn EU banking system.
Mkt trading tick for tick with mitey mite, which ever way it goes mkts will follow. If it goes over a cliff HFT will do that too.
Also posted this under an earlier thread re Euribor rates.
Why have three month eurodollar rates decoupled from this, since those rates should also reflect Euro Zone bank solvency risk and the contagion effect? Apologize if I am missing something basic, but eurodollar rates certainly spiked during the height of the Greek banking crisis. Thanks
The game,as Mephisto noted, can go on forever
for the 'zombie' banks in Europe, between the
fake stress tests ( a meeting took place in Francfort at the
ECB two days before the results were published ) and the
) and the Basel 'smoothing' of the capital rules.
which apparently was forced fed to the 27 regulators
From the BIS's press release: Mr Jean-Claude Trichet, President of the European Central Bank and Chairman of the Group of Governors and Heads of Supervision, said that "the agreements reached today are a landmark achievement to strengthen banking sector resilience in a manner that reflects the key lessons of the crisis." He emphasised that "the Group of Governors and Heads of Supervision have ensured that the reforms are rigorous and promote the long term stability of the banking system. We will put in place transition arrangements that ensure the banking sector is able to support the economic recovery.".The European version of 'kicking the can' with the subsequent effects on the European economy
Black Swan anyone?