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Did The Fed Just Buy Europe A Week?

Tyler Durden's picture




 

One of our most watched indications of the pressure on European funding markets is the EUR-USD cross-currency basis swap. This simple trade is a way for European entities to take the excessive EUR funding they can get from the ECB and 'swap' it into USD to meet their significantly problematic USD funding needs. It has smashed higher (well lower in the charts) as the cost of the transaction moves with demand for the swap - indicating that demand for USD is huge and we are in as much of a liquidity crisis as we were in the middle of the 2008 critical period. What is fascinating to us is today's reaction - a 22bps jump - while being large, merely moves us back to the same levels of stress we were at one week ago. So even if this is seen as some huge form of liquidity surge, it seems not to have even solved the liquidity problems of banks, let alone solvency problems.

Short-term we are back to stress levels in the USD swap funding market from only a week ago. But on a longer-term basis, this is still extreme by any standards.

Charts: Bloomberg

 

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Wed, 11/30/2011 - 10:11 | 1929665 vast-dom
vast-dom's picture

Not even a week. This is all just so disgusting! And illegal! And unconstitutional! And.....

Wed, 11/30/2011 - 10:12 | 1929674 Momauguin Joe
Momauguin Joe's picture

Half life by Friday. Then Plan B (Iran war) kicks in.

Wed, 11/30/2011 - 10:18 | 1929703 SheepDog-One
SheepDog-One's picture

Dump in more dollars...big deal. The problem isnt a LACK of money, its that money is now worthless. 

While everyone is mesmerized  by futures, we're at world war.

Wed, 11/30/2011 - 10:18 | 1929732 mayhem_korner
mayhem_korner's picture

 

 

Yes. Financial sector effectively experiencing hyperinflation.  Trickle-down will accelerate in 1H 2012.

Wed, 11/30/2011 - 10:20 | 1929743 Leopold B. Scotch
Leopold B. Scotch's picture

How we measure wealth is readying to shift from $'s to .oz's.  Simple 'nuff.

Au Bitchezzzzz.

Wed, 11/30/2011 - 10:22 | 1929764 Momauguin Joe
Momauguin Joe's picture

Right now, it's being measured in Black Gold. Iranian Oil, bitchez!

Wed, 11/30/2011 - 10:15 | 1929705 vast-dom
vast-dom's picture

Yes and either way oil goes past $120 and further squeezes global markets in bihyperstagflation nightmare along with more downgrades.

Wed, 11/30/2011 - 10:59 | 1929955 maddogs
maddogs's picture

 oil goes - But GS will make a killing via ICE.

Wed, 11/30/2011 - 10:19 | 1929718 LMAO
LMAO's picture

Yep, better pile in to crude post-haste.

Wed, 11/30/2011 - 10:54 | 1929911 reboot this mofo
reboot this mofo's picture

Look, a WW3 with Iran is not going to be permitted by the international coalition which includes the Russians, Chinese and the Pentagon (and others). The elite will do anything to delay their collapse and the expected arrests & indictments of thousands of miscreants. 0% chance of WW3 from some that knows (and not talking about of his ass).

We are nearing the end for the banking cabal.

Popcorn anyone?

Wed, 11/30/2011 - 11:29 | 1930157 11b40
11b40's picture

Sounds good, but I think you are dreaming.

Wed, 11/30/2011 - 11:32 | 1930189 Odin
Odin's picture

I'd like to agree, however I fear they would rarther destroy us all then submit... These are, after all, some ruthless mother fuckers...

Wed, 11/30/2011 - 10:58 | 1929936 maddogs
maddogs's picture

Syria first..it'll choke Iran supplies,,, then the Feces hits the orbiting surfaces of the rotary device.

Wed, 11/30/2011 - 10:14 | 1929691 Tsar Pointless
Tsar Pointless's picture

...being ignored by 95% of the world population?

Yes, I agree. It's terrrr-i-ble. (Said in my best Cleveland Brown voice)

Wed, 11/30/2011 - 10:17 | 1929712 SheepleLOVEched...
SheepleLOVEcheddarbaybiscuits's picture

Doesnt everyone see whats going on? yesterday consumer confidence soars, today adp employment soars, warmongering with iran, pakistan, today markets soar on interest rate manipulation. This is the EXACT same shit bush jr pulled to get reelected. This makes me sick.....

Wed, 11/30/2011 - 21:24 | 1933407 StychoKiller
StychoKiller's picture

"The yellow jester does not play, but gently pulls the strings,

And smiles as the puppets dance, in the court of the Crimson King." -- King Crimson, "Court of the Crimson King"

Wed, 11/30/2011 - 11:30 | 1930171 xcehn
xcehn's picture

When they throw in the kitchen sink and start bailing out aliens, you know the end is here.

Wed, 11/30/2011 - 10:13 | 1929666 GeneMarchbanks
GeneMarchbanks's picture

LOL. Escalation pure and simple. Cameron cannot get this iRan thing started fast enough.

Since everyone will soon forget about the complete clusterfuck that is/was MF Global, I'd just like to say one last time: Fuck Jon Corzine.

Wed, 11/30/2011 - 10:20 | 1929750 Zero Govt
Zero Govt's picture

Cameron is merely following his hero, Tony Blair, and wanting to start his own false murderous expensive mindless war

i think it insures a $1m consultancy contract with Credit Suisse when he leaves office with country in even more of a mess than when he started.. it's a performance bonus

Wed, 11/30/2011 - 14:56 | 1931563 reload
reload's picture

I am certain Barclays already own Cameron, but perhaps he will be alowed some consultancy gigs as well. Blair has JPM covered, his peace envoy bullshit job is perfect cover for doing JPM chores.

These people are truly above the law, how I wish it were not so.

 

Wed, 11/30/2011 - 12:29 | 1930590 Ghordius
Ghordius's picture

Cameron is Just Following Orders, for criminy...

Thu, 12/01/2011 - 08:20 | 1934393 DrunkenMonkey
DrunkenMonkey's picture

So true. Did you see how soon after visiting with the US prez (and his henchmen) he was touting Turkey for EU membership (yet again) ?

This dispite the fact that all the major European leaders are quite happy to go on the record and say "there's not a chance in hell we will allow a(nother) US satrap into our club".

 

Wed, 11/30/2011 - 10:11 | 1929668 Irish66
Irish66's picture

Isn't that how long it lasted when they did it for Lehman

Wed, 11/30/2011 - 10:22 | 1929669 DormRoom
DormRoom's picture

arrggh.. the ogligarchs  wil (have)l monetize!  high to hyper inflation for the 99.  Reward the speculators, and punish savers.

 

The West is headed straight into uncontrolled stagflation in 2012.  And Japan will go bust, because of central bank monetizing.

 

They must know, but don't care.  The hubris! 

 

http://bpp.mit.edu/usa/

Thu, 12/01/2011 - 08:22 | 1934397 DrunkenMonkey
DrunkenMonkey's picture

Interesting. So, Japan logically to go first, given their debt levels, but followed by whom ?

Wed, 11/30/2011 - 10:11 | 1929671 Tsar Pointless
Tsar Pointless's picture

Perhaps.

It also bought Bank of America a few more days.

Wait until next week. This will be a distant but painful memory.

And things will be much much worse than they are now.

Final bazooka has been utilized. Clear the way for the drones and warships.

Wed, 11/30/2011 - 10:19 | 1929738 SheepDog-One
SheepDog-One's picture

Funny how we're ALREADY at 'So, whats next'? Even Cramer just said it wont last but for a moment. 

Wed, 11/30/2011 - 10:12 | 1929677 stop.snitching
stop.snitching's picture

Even Cramer said it might only last a week at best....

Wed, 11/30/2011 - 10:15 | 1929683 Zero Govt
Zero Govt's picture

looks like the Germans put their foot down (on the brakes) in the ECB

you can always depend on Kamakazi Ben and Turbo Tim to hit the gas peddle ...the Thelma & Louise of futile suicidal economic morons

Wed, 11/30/2011 - 10:13 | 1929684 Sudden Debt
Sudden Debt's picture

A LOT CAN HAPPEN IN A WEEK!!

I ONCE LOST 3 POUNDS ON A CRASH DIET OF 1 WEEK!

 

Wed, 11/30/2011 - 12:27 | 1930566 Ghordius
Ghordius's picture

Lost pounds?
Pound? Lost?

SHORT THE POUND!!!

Wed, 11/30/2011 - 10:14 | 1929689 Peter K
Peter K's picture

What you/we all need to understand is that this is a short term fix. It allows banks to fund their USD exposure a littel cheaper. But at the end of the day, you still have a solvency problem  in the EU which this move does not address. Therefore, you need to keep your positions small, so as not to have margin issues. But the flip side of this coin is that when this puppy moves, you will get your bang for the buck. :)

Wed, 11/30/2011 - 10:16 | 1929690 Manthong
Manthong's picture

Please make to sure to tell the algos that all is NOT well.

Wed, 11/30/2011 - 10:32 | 1929807 SheepDog-One
SheepDog-One's picture

They're retards.

Wed, 11/30/2011 - 10:14 | 1929693 youngman
youngman's picture

it is long enough for TPTB to get in..or get out..whatever they needed to save themselves cash....in the meantime we the peons lose it...

Wed, 11/30/2011 - 10:14 | 1929694 lolmao500
lolmao500's picture

Good I hope they do that till inflation crushes everything. Silver and gold bitchez!

Wed, 11/30/2011 - 10:15 | 1929702 midgetrannyporn
midgetrannyporn's picture

Steroid shots make a dying system feel and look better for awhile. That's all this is.

Wed, 11/30/2011 - 10:16 | 1929706 mayhem_korner
mayhem_korner's picture

 

 

Two minute offense down 4 TDs.  Should be fun.  :D

Wed, 11/30/2011 - 10:18 | 1929729 Tense INDIAN
Tense INDIAN's picture

whatever it is ...the LONGs should book profits....::

 

http://markettechnicals-jonak.blogspot.com/

Wed, 11/30/2011 - 10:18 | 1929734 TuborgGold
TuborgGold's picture

Bad day to be short the euro...poor me

Wed, 11/30/2011 - 10:59 | 1929950 tradebot
tradebot's picture

You haven't been paying attention

Wed, 11/30/2011 - 10:29 | 1929796 Scalaris
Scalaris's picture

A week is too optimistic, every word-powered floor since August's and September's market plunge, along with October's ramp, has seen its time span decreasing since "investors" became more desensitized and immune to unsubstantiated rhetoric. 

Risk will be sold into any ramps as even the robots know, that until the solvency matter is addressed, the current market is a minefield, despite the jubilant global bullshit.

Wed, 11/30/2011 - 10:32 | 1929805 yabs
yabs's picture

they catuallyjust made the situation way worse with oil zooming higher

this will kill the economy

Wed, 11/30/2011 - 10:32 | 1929806 Nemo01
Nemo01's picture

Anyone has an estimate of the liquidity (in usd) beeing flushed into the system?

Wed, 11/30/2011 - 10:42 | 1929846 machineh
machineh's picture

Get ready for a classic '9:45 a.m. flameout' in US stocks.

This is overdone.

Wed, 11/30/2011 - 10:44 | 1929854 yabs
yabs's picture

eurpopean stocks are now up almost 10 percent in 2 days

obscene

Wed, 11/30/2011 - 10:47 | 1929871 Snakeeyes
Snakeeyes's picture

Global Central Banks Go to Defcon 4 - "Fire up the printing presses, gang!" Or at Least Swaps

http://confoundedinterest.wordpress.com/

Look at Euro bond yields versus US yields. US yields actually ROSE.

Wed, 11/30/2011 - 11:14 | 1930041 SofaPapa
SofaPapa's picture

For a novice non-specialist, could someone answer a question please?  How does a move like this compare with the anticipated "QE3" people keep sighting on the horizon?  Thanks in advance.

Wed, 11/30/2011 - 11:14 | 1930046 kralizec
kralizec's picture

Bought a week to find real uinicorn farts, isn't that just fabulous....

Wed, 11/30/2011 - 11:21 | 1930095 Paradigm
Paradigm's picture

take what you can NOW

Wed, 11/30/2011 - 11:21 | 1930096 Paradigm
Paradigm's picture

take what you can NOW

Wed, 11/30/2011 - 11:42 | 1930259 gookempucky
gookempucky's picture

Currency/derivatives creation has literally exploded to super nova..............running around 100 million a minute since the intervention announced.....this is the funding for the bailout.

Wed, 11/30/2011 - 12:24 | 1930540 Spanish Lizard
Spanish Lizard's picture

Tyler,

This letter is from Survival Blog.  IT seems that Zero Hedge among others is blocked on government servers.

James,
They are now blocking SurvivalBlog along with Zero Hedge and I Hate The Mediafrom work where I work. Yes I'm on a government network. I assume that more of the alternative media sites are going to be blocked, shortly. I'll send you updates as they are blocked.  Thanks for your time. - C. in Northern Virginia.

Wed, 11/30/2011 - 12:40 | 1930680 puck
puck's picture

You can still get to all sites banned by typing the ip address into the url address bar

Wed, 11/30/2011 - 21:29 | 1933423 StychoKiller
StychoKiller's picture

You asked (or will...) for it boyz 'n grillz, so here it is:

ZeroHedge IP addresses:
http://188.126.66.66
http://188.126.66.6

 

Do NOT follow this link or you will be banned from the site!