Europe's Old Nemesis, Illiquidity, Is Back

Tyler Durden's picture

One of the most-watched stress indicators from the European crisis (pre-LTRO) is starting to flash orange warning lights again. The 3-month EUR-USD basis swap (or how to get USD funding when no-one else will help) has just deteriorated its most over the past 5 days since mid-December. Having never realized more normalized levels from early last year, the rapid acceleration in this funding instrument's use last year and now this year is perhaps why bank stocks are under such incredible pressure as insolvency meets illiquidity head on once again.


Chart: Bloomberg

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derek_vineyard's picture

a measly 5% draw down on spx after a 30% run up for year has bond yields compressing way too fast in coorelation

the money that is 'in the game' is moving around and magnifying market moves as no new money will enter

SheepRevolution's picture


derek_vineyard's picture

romney will just slow down the inevitable.....let obama win and let house collapse, so we start rebuilding sooner

kindape's picture

house collapses faster under romney, which may or may not be good - depends on what the rest of us do with the crisis/opportunity

SheepDog-One's picture

The house collapses when the FED gets together and see their returns are diminished and theres no point in going further with the same shit....that point is likely already passed by.

Vampyroteuthis infernalis's picture

You can cheat a system for only so long. If central planning worked, we all would be comrades in a worldwide Soviet empire. The Fed is getting a dose of reality.

Zero Govt's picture

the only reality the Fed knows is when bankrupt WS Banks or the debt-ridden cash strapped US Govt comes a begging

Bubbles Ben knows nothing else but the world of cronism.. that's his job

FlyPaper's picture

Obama?  Do you honestly want to give 4-years to a guy who just made up his own executive order to give him complete and total control of everything in the US in case of "emergency" which he can declare?   Same guy who signs a bill cancelling your Habeas Corpus rights and is "unsure" if its OK to kill American citizens without trial?

We are watching a slow-motion coup de etait right in front of our eyes.

I'd rather roll the dice with Romney.  He's another establishment guy, and hopefully the right can pressure him.  Obama, as a lame duck, has nothing to lose and will step even further out of bounds without the electorate to reign him in.


jeff montanye's picture

if obama's so unsure, why does he kill u.s. citizens (and their teenage relatives) without trial?  i think he's lying.  it's the one thing he's good at.

SheepDog-One's picture

Thats just it, they desperately need to pass off this printed money pump, but they cant do it. 'Retail' first of all is broke, and the mood in this country is anti Wall St and anti govt, no matter what the sycophantic media says to the contrary.

Dr. Engali's picture

Just print about 5 trillion Ben and get it over with. You know you're going to.

Dr. Engali's picture

Then they will have everything in place for the culling of the herd.

CPL's picture

If it makes you feel better about things.  India, largest manufacturing facility on the planet for bullet and munitions, is out of coal and diesel and having a lousy time obtaining anything.  Pakistan is hosed and is on a rotating black out scheduel that doesn't run on scheduel.


All those government orders of billions of rounds of ammunition aren't coming.  Ever.  no power = no factory orders...


Oh yeah cotton shortage as well has dampened the mood of production as well.  Have a guy in my circles on g+ that enjoyed the big military expo, but all he can do is fill orders...that don't show up.


#PeakEverything baby


ATM's picture

Print $10T, then $20T then $40T then $1Quadrillion..................That's always been the end game.

CPL's picture

Extra special gas prices for everyone to enjoy.

insanelysane's picture

Instead of printing 5 trillion, we could just have 2 years of no taxes.

CPL's picture

That's coming...but it'll involve a government credit collapse first and employee checks bouncing and other fun things like gas being 15 a gallon.


Even then, nobody will know what a buck is worth

SheepDog-One's picture

$5 its going to be hillarious seeing this country deal with $6-$7 gas!

Peter K's picture

Socialism es muerte:)

Village Smithy's picture

Maybe buy a little here as we can expect another synchronised central bank intervention tonight.

urbanelf's picture

How is illiquidity a "nemesis" when it's the easiest problem to solve?

SheepDog-One's picture

Seems theyre now past the point where adding 'liquidity' to 'solve' things is now a negative.

Vince Clortho's picture

when the only tool you have is a hammer ...

SheepDog-One's picture

Gosh thats a shame, central banksters taking it right up the kazoo again....and just think, they had it all certified totaly fixed just a few weeks ago!

pods's picture

I got some liquidity for ya!

CPL's picture

Front left pocket...just reach in and touch it.

Winston Churchill's picture

Humpty Dumpty had a big fall..........

All the Kings central bankers couldn't..........

Zero Govt's picture

..put the Bubbles together again

Cat Woman's picture

Must you boys be disgusting?

slewie the pi-rat's picture

a rising libor is about the opposite of a rise

last time (last year) didn't the FED toss out a buncha "swaps" with the EZ banksters?  the "dollars4shit" deals?

who knows what anybody will do now?

so much fungibility;  so little time...

Olympia's picture

...the barbarians, who forced beautiful Europe to get down Zeus’“back” and made her a prostitute ...the unworthy Europeans, who in 1945 “took Europe down” from “Mount Olympus” and in 2012 relinquished “enslaved” Europe to the Phoenician loan sharks.

Germans are proved to be the easy solution to breach Europe’s door. Whoever wishes to “set foot” on Europe and demolish it, the only thing he has to do is to “fool” the Germans. For a second time in less than fifty years, Europe’s idiots become the victims of foreigners and they serve their interests at the expense of Europe...



The German traitors of Europe along with the Phoenicians from Asia may have forced Europe to get down from the "back” of the Greek “bull”, but it remains to be seen how they shall pull it through with the “bull”.



katchum's picture

America isn't any better, liquidity at JPM, C, WFC has decreased too.