So Much For That European Liquidity Normalization: Marginal Lending Facility Borrowings Surge To Fresh Post Launch €17.1 Billion Record

Tyler Durden's picture

So much for that "normalization" in European liquidity. After on Friday we noted that borrowings under the Marginal Lending Facility dropped by a whopping €12.7 billion to €2.2 billion, the latest ECB update shows that MLF borrowings have once again surged to a new post launch record of €17.1 billion. And while the original surge was first explained by a "fat finger" and later by the need of failing Irish banks to pledge collateral at a punitive 1.75% rate in exchange for overnight access, this time around the same explanation will be more difficult to fly considering that Anglo Irish and INBS were said to have achieved some degree of normalization over the past week. Today's action puts the whole "blame Ireland" explanation in question, and asks who else is in dire need of liquidity. We can't wait to hear what the ECB floats as justification.

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sushi's picture

So what is keeping the euro afloat?

The money frozen out of Libiyan and Egyptian accounts? The great whack of cash coming from Ireland? Iceland about to change it's mind? Or Benocide under the table?

EscapeKey's picture

In the Country of the Blind, the One-Eyed Man is King.

snowball777's picture

But he still doesn't have any depth perception.

Ayn Rand's picture

Just don't expect an honest answer.

jus_lite_reading's picture

I didn't think one day would signal all is well. Did you?

The only thing keeping the Euro afloat is the dollar's disease. The Fed is purposely killing the dollar to keep the Euro alive. They know the Euro is a goner but it holds key to the continuation of their ponzi scheme. After all, they haven't had enough time to finish their underground bunkers!

Oh regional Indian's picture

Given that the NUMBers, even such highly manipulated ones, are starting to tel such a sad tale that we will begin to see more and more M3 style black-outs.

But really, look at that spike! This is not meant to end well or normally. Every day, the news confirms this.

We should prepare accordingly. 


A Man without Qualities's picture

It's actually the same thing as before, just this time from a different bank.  Allied Irish bought a bunch of assets from Anglo Irish, and both banks had to switch these assets to the daily facility rather than the weekly facility around the time of the switch, so there was a spike that went away as the Irish Central Bank provided the bridge loan to facilitate the transfer, then it came back again and then it will go back into the weekly facility I think tomorrow.

Samsonov's picture

The blow-up is still a long way off.  You'll know it's near when they talk about it on The View or Good Morning America.

Dick Darlington's picture

Calling Mr Rehn, there's still a lot of tax payer euros to throw around before the wheels come off.

smlbizman's picture

did anyone see bullard this morn?....i would think even the most ardent kool-aid drinkers could see thru this sham.....i would think he was so deceptive that he no longer can look himself in the mirror and will soon join madoffs son in the big etf from beyond..ticker symbol.. hell

RobotTrader's picture

Both the Euro and stocks are going ballistic on this news.

Samsonov's picture

Ballistic?  They're rising.  And not on this news.  The weak hands got flushed out last week, so it's simply back to normal today.

smlbizman's picture

cnbc has credited bullard with this rise in the markets.....are you drinking cherry or grape?

Samsonov's picture

Oh, well if they said it on CNBC, then who am I to argue.

smlbizman's picture

i was implying that robos comment was just repeated from cnbc...which would make robo a kool-aid drinker, i was just curious to what flavor it liked....they are {cnbc}  so complicit with the fraud ...

Ethics Gradient's picture

From the FT:

Overnight borrowings from the ECB jumped (again) on Monday — this time to €17.115bn. And this time, the dynamic in Irish banking that has driven this newest spike is fairly clear, if no more sustainable in the long term.

Here’s what’s happened.

Allied Irish Banks ‘won’ an ‘auction’ of ‘deposits’ from bust lender Anglo Irish last week. In reality, and as Ireland’s premier central bank watcher Lorcan has explained, the point of the ‘auction’ wasn’t just to divest a doomed bank of deposits, but also to aid the funding of Allied Irish Banks.

Allied Irish also ‘won’ €12.2bn of Nama bonds — debt issued to Anglo Irish in return for sending troubled loans to Ireland’s bad bank, which carries a government guarantee and is therefore eligible collateral for open market operations at the ECB.

Swiftly eligible, in the case of what Allied Irish has just done with the €12.2bn — throw in €3bn of old Irish Nationwide Nama bonds sold to Irish Life & Permanent, and you get Monday’s borrowing figure.

Certainly, Allied Irish’s new purchases have been sent straight to the Marginal Lending Facility — at a penalty interest rate of 1.75 per cent. Nevertheless, that’s only in order to wait for entry into this week’s (1 per cent) Main Refinancing Operation.

Happy Allied Irish.

sushi's picture

Nice graphic.


But the second word in the headline should be TITS: Too Insolvent To Survive.

Gunther's picture

There is even more emergency borrowing going on; in the monthly Bundesbank report lending to other Eurozone-central banks is up to 338 billion euro with a pre-crisis-number being around 18 billion euro.
"Doch wie sich jetzt herausstellt, hat die Deutsche Bundesbank zuletzt stillschweigend in einem Volumen Finanzhilfen gewährt, die alle europäischen Rettungsmaßnahmen in den Schatten stellen.
Die brisante Zahl versteckt sich unter dem Posten „Forderungen innerhalb des Euro-Systems (netto)“ in den Monatsberichten der Bundesbank. Danach sind die Schulden, welche die Europäische Zentralbank (EZB) und nationale Notenbanken im Euro-Raum gegenüber der Bundesbank angehäuft haben, bis Ende 2010 auf 338 Milliarden Euro gestiegen. Allein die Forderungen an nationale Notenbanken in Euro-Ländern belaufen sich auf 326 Milliarden Euro. 2006, also vor Ausbruch der Finanz- und folgender Euro-Schuldenkrise, lagen die Forderungen insgesamt bei nur 18 Milliarden Euro."

Miles Kendig's picture

Is this how WestLB plans to meet Basil III (by going MiLFy)?

Gunther's picture

West LB has a bad bank, only the bad-banker-jail is missing.

Dick Darlington's picture

ECB announced latest monetization data today. JCT has now "provided medium term price stability" amounting to a figure of more than 16% of the outstanding debt of Ireland, Portugal and Greece. I guess the "price stability" refers to bond prices nowdays, not inflation.