ECB's FX Swap Line With Fed Soars To $85 Billion Total

Tyler Durden's picture

The dollar scramble continues. In addition to the Flop Ex Machina which is the LTRO, now confirmed to be a failure courtesy of the ECB's relentless buying Italian and Spanish bonds, something the bank were supposed to be doing, the ECB has reported that European banks have pulled another $33 billion in 14 day funds with the ECB, which in turn means that the cumulative total now, net of the expiring 7 day operation which runs out on December 22 and holds $5.122 billion, is a whopping $85 billion, and is above the level of swap line usage before the Lehman collapse which peaked at $67 billion, then exploded to a peak of $583 billion following the Lehman failure. Below is a chart showing what the Fed's swap line usage will look like when the FRBNY updates its facility usage next Thursday. This explains why both the 1 month and 3 month basis swaps (last at -130 bps, -13 bps on the day) have been leaking wider all day once again. We, for one, can't wait for tomorrow's H.4.1 update to see just how high the Discount Window usage jumped to in the past week.

And the complete breakdown of all existing FX swap lines from the ECB:

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Schmuck Raker's picture

You know you're getting old when it's a big deal. ;)

StychoKiller's picture

Concern:  Finding out for the first time, that you can't do it a second time.

Panic:  Finding out for the second time, that you can't do it the first time!  :>D


lizzy36's picture

Pretty sure can get to $1T by June 1, 2012.

l3lackout's picture

June? mmm thing more Jan... this is about to get ugly they fired all bazookas and nothing seems to be working... so tight your seat belt and enjoy the ride DOWN... as ZH said before this is only 20% of the total deleveraging required by banks and NEVER is a good thing that banks required 645B!!

SheepDog-One's picture

We fired all our bazookas to no avail....but no problem we got 1 more bullet in our pistol.

GeneMarchbanks's picture

Now the only question is: Will Sardinia be collateral? Your move Durden...

[If I could post a pic, I would. Just to satisfy the Fedwatchers]

DormRoom's picture
Italy’s GDP Contraction Might Indicate Fifth Recession Since 2001: Economy


Contracting GDP. Huge debt. large 2012 debt rollover.  high yields. The math is against Italy.

GMadScientist's picture

No, we good for it. You trust. We pay. <moves hands over head>

DrunkenMonkey's picture

Worry not, they will pay in unsullied virgins if it comes to it.

ThrivingAdmistCollapse's picture

Either that or a suckling pig or two.  Sigh...our economy is going to collapse.

Everybodys All American's picture

With the swaps they are essentially buying the debt right now.

hedgeless_horseman's picture



Reminds me of kiting checks for DVP TD+5.  Plenty of time to unwind before they report anything. 

Irish66's picture

I'll buy 1 Italian bond and ECB buys 9..priceless

Jlmadyson's picture


If there was one chart to sum it all up it would be this one. Well beyond Lehman and they all know it.

hugovanderbubble's picture



This is worst than Lehman Case....

Ready for sell off and VIX > 100

Rehypothecated Funds Fraud

+Credit Event ISDA -CDS trigger in Greek,Portuguese Bonds...+Italian & Spanish Haircuts...

(watch out French)

We remain long 5y CDS protection on France, at 210bp (target 300bp)

GeneMarchbanks's picture


Hyper-hypothecation is what sets off a reset as the fine people at this site have noted. How it starts concerns me less than how it ends...

Schmuck Raker's picture

"Ready for sell off and VIX > 100"

From your lips to Dog's ears, Hugo.

Jim in MN's picture

An episode of Lehmanic stress.

Jim in MN's picture

Japan getting ready to puke n die too.  Looking at debt swaps with China to which China is going, like, 'Hunh?'

Japanese debt agency downgraded Japanese bonds today:

Japan credit agency downgrades Japanese govt bonds

A leading Japanese credit rating agency has downgraded Japanese government bonds for the first time.

Rating and Investment Information, or R&I, on Wednesday downgraded Japanese bonds by one notch from the top AAA rating to AA+ .

The agency gave as a reason the country's fiscal instability, citing the possibility there may be no review of expenditure for fiscal 2012, including social security costs, and that the consumption tax may not be raised as planned.

Japanese government bonds have already been downgraded this year by US credit agencies Standard and Poor's, and Moody's.

Wednesday, December 21, 2011 18:08 +0900 (JST)


Also see Mish on Japan, from last night:

GMadScientist's picture

"Bitch, I told you I was a scorpion." - China

fonzanoon's picture

They won't let a Lehman happen. They just won't. Or maybe they are brilliant. They let Lehman x10 happen. The whole system blows up. They hand Ron Paul the election and say "hey clean this up!".

Caviar Emptor's picture

But in preventing a Lehman they can throw the baby out with the bathwater because there's an economic cost that's way bigger: grinding the real economy down to a nubbin with capital, jobs and people flying out the window. But no "lehman2". Winning

GeneMarchbanks's picture

+1 for the word "nubbin", severely under rated.

fonzanoon's picture

Even if I disagreed with you which I follow the golden rule which is first one to use "nubbin" in a sentence wins.

StychoKiller's picture

Such a flibberty gibbet -- it's like there's an autogyro in yer shirtwaist!

DormRoom's picture

And why would any rational being stay in equities or own risk, when Lehman (Le-hman) 2.0 is likely about to happen in 1Q2012.



fonzanoon's picture

Okay I'll bite....why have they?

LawsofPhysics's picture

Trade bots don't care about anything except the power being on.  Nothing changes until the power goes out.  Then it becomes a free for all.

DormRoom's picture

Gresham's law.  bad money (HFT & HedgeFund short-term-focus-trading) pushes out good money (retail long term investing).


As long as bad money continues to circulate in the market, buying up 2xETFs, and applying massive leverage, the market may continue higher.  But I do believe, if there's a shock that comes out of Europe, we will see another flash crash. Bad money will exit the system quick.


Easy credit by the Central Bank incentizes bad money pools, and pushes away good money capital formation needed by efficient enterprises to grow.  Which is why--as Bill Gross has argued--ZIRP may be anti-stimulative for the real economy in the long run.

bnbdnb's picture

Can the banks take their LTRO and swap for dollars?

yogibear's picture

ECB it's time to stuff Bernanke and the Fed with swaps. When the Euro goes bye-bye the US fed can just absorb the loss.

Bernanke and the US Fed are a finaicial black hole.


Now that Draghi is handing out free money bet bankers know they can keep coming back for more. All the countries latch on and keep coming back asking for more. It's the land of skittle pooping unicorns with Draghi.  In another quarter Euro banks can come back for more. 

It's always good to take someone else's money. Divert it wisely.


MFL8240's picture

What the fuck business doe this country have in a swap agreement or any involvement in these countries?  The answer is none but the reality is that the TRIBE wants power and influence and is prepared to risk your country and your future to get it.

Caviar Emptor's picture

Activists say 111 killed in Syria's "bloodiest day" 

Caviar Emptor's picture

Each Chevy Volt sold thus far may have as much as $250,000 in state and federal dollars in incentives behind it – a total of $3 billion altogether, according to an analysis by James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy.

Way to grind the economy down. But wait: guess how many dollars support each banker at BAC? 

orangedrinkandchips's picture

I worked at a large conservative bank a while back in a department that was created in the early 90s BECAUSE THAT BANK HAD TO GO TO THE DISCOUNT WINDOW. It was the first and only time they did. They said never again after they had to borrow money. Hence, the powers that be realize that going to the discount window is an epic failure and you are on bended knee. You fucked up, so my dept would monitor cash and accounts to make sure we had enough to cover and invest the rest overnight. Basic finace shit.


Discount window= you failed. That is why my dept. which 99% of people wouldnt understand what or why we did it but as a deptartment we drove the ship and PREVENTED IT FROM RUNNING AGROUND. (As a captain of a ship, especially in the flats down in Florida, if the tide is going out and you are beached for a night, it's called fucking up, same thing with the Banks.)


Clearly these banks think about leverage and return rather than staying solvent. That means buying good paper and stacking it so it's not all tied up. Basic shit.

Head of the reserve of the bank once told me..."You either pay out the nose or bleed out of it....." one or  the other.

I hope they see these shortfalls as an epic failure, but somehow I think these fucks think it's business as usual.


NooooB's picture

+1 for a boating analogy. (not using the phrase "sinking ship")

lolmao500's picture

Stupid EU banks. Get your damn money from the ECB!

Jlmadyson's picture

This chart should be stickied to the top of this sight with arrow marking where they are now. That's all that needs to be said. Chart of the year.

GMadScientist's picture

“The banks have now been rescued and these people who earn several million still will earn millions, and they are often the same people who buy art at high prices,” said Neuendorf

Lulz. This Fifi will be early against the wall.

Snakeeyes's picture
This is getting crazy! Central Banks Gone Wild! ECB’S Long Term Refinancing Operation (LTRO) Funds $638 Billion to Eurozone Banks (Pull The String!) – Reaction is Negative in Italian and Spanish Bonds