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ECB Succeeds With Latest Weekly Sterilization Of €207 Billion In PIIGS Bond Purchases

Tyler Durden's picture




 

Following yesterday's announcement that the ECB had purchased a new record total of €207 billion in peripheral bonds, many were focused on today's ECB sterilization announcement to see if, like last week, there would be a failure in the repo market, and less than the full amount of bonds to be sterilized, would be bid. As it happens today the ECB lucked out, after 113 bidders submitted bids for €236 billion in bonds, at a rate of 0.65%, with the threshold €207 billion amount being covered comfortable at 1.19x. Yet one wonders what is it that caused the €50 billion swing in available capital for European banks (last week the tendered for amount was €194 billion). What is ironic is that earlier today, the ECB provided €252 billion in a liquidity providing operation (MRO) to 197 banks at a fixed rate of 1.00%. In other words, banks borrowed €252 billion at 1% from the ECB to lend €207 billion back at 0.65% to the ECB. And that is called a "successful" sterilization.

Charting the ECB's recent sterilizations:

 

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Tue, 12/06/2011 - 08:25 | 1950324 DB Cooper
DB Cooper's picture

They'll make it up on volume.

Tue, 12/06/2011 - 09:24 | 1950455 Flakmeister
Flakmeister's picture

Damn... beat me to it...

Tue, 12/06/2011 - 08:25 | 1950325 hugovanderbubble
hugovanderbubble's picture

Well Commerzbank doesnt think the same:(

Tue, 12/06/2011 - 08:26 | 1950326 Havana White
Havana White's picture

Reverse arbitrage, bitchez!

Tue, 12/06/2011 - 08:37 | 1950344 Global Hunter
Global Hunter's picture

very good++

Tue, 12/06/2011 - 08:26 | 1950327 Peter K
Peter K's picture

Ka Ching :) Hey, it's free money:)

Tue, 12/06/2011 - 08:28 | 1950328 Peter K
Peter K's picture

Besides, it't the OPTICS that count:)

Tue, 12/06/2011 - 08:31 | 1950334 buckethead
buckethead's picture

Success can be defined in many ways.

 

Borrowing money to lose money could be considered success, if you intend to lose money. (insert smiley here)

 

(or if you seek instill false confidence)(Insert winky here)

Tue, 12/06/2011 - 08:36 | 1950341 AngryGerman
AngryGerman's picture

ECB succeeds! Crisis over! Turn risk back on! Save christmas bonus!

Tue, 12/06/2011 - 08:36 | 1950342 Irish66
Irish66's picture

do they have a credit card I can sign up for?

Tue, 12/06/2011 - 08:37 | 1950346 GerritB
GerritB's picture

Why do I keep paying 5% interest on my mortgage??

Tue, 12/06/2011 - 08:37 | 1950347 youngman
youngman's picture

Its amazing the tricks..slight of hands that governments..central banks..and even the so called investors are doing to make this all seem NORMAL...or LEGAL

Tue, 12/06/2011 - 08:37 | 1950348 AUD
AUD's picture

I'd like to know how a 7 day ECB bond could not be considered 'money good'?

Tue, 12/06/2011 - 08:39 | 1950350 I am Jobe
I am Jobe's picture

Roast those PIIGS. Nice. Yeap

Tue, 12/06/2011 - 08:45 | 1950368 youngman
youngman's picture

I think the 19th is when Italy has to refinance 800 billion in debt....that could be an interesting day...I might have the number wrong but its an amount where the other powers that be have to decide wether to bail them out..print cash..or let the EU go down...and every country for themselves....

can anyone explain to me why and how the EURO is staying up so well...????  baffles me

Tue, 12/06/2011 - 08:46 | 1950370 edmondantes
edmondantes's picture

These numbers are all fraudulent - anything published by this criminal syndicate is completely false.  Everything they say is a lie.

Tue, 12/06/2011 - 08:47 | 1950371 papaswamp
papaswamp's picture

Reverso repo? What a whicked web the bankseristas weave.

Tue, 12/06/2011 - 08:54 | 1950387 Barbarous Relic
Barbarous Relic's picture

It's even worse - banks borrowed at 1.25%, not 1.  

Tue, 12/06/2011 - 09:07 | 1950413 richard in norway
richard in norway's picture

is there a primer on how this shit works, who has got the piggs bonds, why do they call it serileization when there is no antiseptic or boiling involed. is the ecb making money on this deal or are they loseing loads

Tue, 12/06/2011 - 09:12 | 1950426 laosuwan
laosuwan's picture

What is happening in Europe is all by design

 

“The EU was founded and initially led by ‘former’ Nazis and Fascists, as was the Charlemagne Prize awarded to Tony Blair, Edward Heath, Roy Jenkins and others for their role in removing democratic sovereignty from the nation states of Europe.” No wonder, says Atkinson, that the EU has today reproduced the policies and structures of 1940s Europe and shows all the characteristics of a totalitarian anti democratic corporatist Empire — for that is what its fascist founders intended.

The Nazis and The Fascists Who Founded the EU and Their Profound Influence on Eurabia Today

http://www.juliagorin.com/wordpress/?p=2675

Tue, 12/06/2011 - 09:22 | 1950452 KickIce
KickIce's picture

Just wrote myself a check for a million dollars, guess that makes me a millionaire.

 

Tue, 12/06/2011 - 09:34 | 1950478 AmCockerSpaniel
AmCockerSpaniel's picture

Ans will have to wait till you deposit it in your checking account.

Tue, 12/06/2011 - 17:46 | 1952783 smiler03
smiler03's picture

SUCKER!! I'm a Billionaire!

Tue, 12/06/2011 - 09:35 | 1950480 spanish inquisition
spanish inquisition's picture

Yet one wonders what is it that caused the €50 billion swing in available capital for European banks (last week the tendered for amount was €194 billion).

"You shouldn't be looking too hard for answers. If you know what's good for you" - Ben

Tue, 12/06/2011 - 09:39 | 1950492 b_thunder
b_thunder's picture

"...banks borrowed €252 billion at 1% from the ECB to lend €207 billion back at 0.65% to the ECB. And that is called a "successful" sterilization."  -  "successful" is a subjective notion, but this deal is definitely better for the tax paying public than what the effing Fed has been perpetrating for over 3 years:  lending $7 trilllion to the banks at 0%, and then have the US Treasury borrow the same money back from the same banks at 2 and 3%! (soon to be much higher than that)

 

 

Tue, 12/06/2011 - 10:06 | 1950578 Georgesblog
Georgesblog's picture

Against the background of the total debt, the ECB needs about 100 more bond sales, like that. 100 slugs in the vending machine, you take one out, pass it around, 99 slugs in the vending machine ......

 http://georgesblogforum.wordpress.com/2011/11/02/the-daily-climb-2/

Tue, 12/06/2011 - 10:20 | 1950637 PlayTrader
PlayTrader's picture

Can someone explain to me why anyone would borrow money at a higher rate to lend it out at a lower rate? This seems to be what this thread implies. Doesnt make sense to me. Surely different banks are lending to those borrowing! In which case this is a real sterilisation.

Tue, 12/06/2011 - 13:09 | 1951244 Matt
Matt's picture

well, if fractional reserve banking was as super-powerful as many critics seem to claim, I would think they could borrow $20 billion at 1% and then lend $200 billion at 0.65%, making a net 5.5% return. But that doesn't seem to be how it actually works.

Tue, 12/06/2011 - 16:51 | 1952537 LudwigVon
LudwigVon's picture

Additionally, the connected parties (Not MF), as orchestrated ( deliberate min hype on fed emp retirement $ thef, deliberate min hype no biggie co-mingling private retirement theft, balloon, balloon ), when loaning at 1.25%, are receiving Euros in exchange for shriveling value BIGPIS debt, hence comment #1 on this thread that the ECB/Uber-levered beta fund, investable by holding the Euro, that they would make it up on volume. Connected parties de-risk, receive csh which can be 10x loaned, of which they chose to park a vast majority back with the ECB at .65%...for now...

Tue, 12/06/2011 - 16:50 | 1952531 LudwigVon
LudwigVon's picture

.

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