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Fed Dollar Swap Lines With Europe Soar To $1.9 Billion, Most Since June 2010

Tyler Durden's picture


For a week in which Europe was supposed to be healing, and certainly not provoking the curiosity of forensic capital chasers, it sure did a heck of a job. In the week ended October 19, the Fed disclosed that not only did it roll its $500 million 7 Day facility (at 1.08%) with the ECB, but it also entered into a new 84-Day 1.09% facility (this is about 60 bps more than 3M USD Libor, confirming just how ridiculous and meaningless the 3 month USD Libor market is). It is of course unclear which bank ends up being on the ECB's receiving end, but one thing is certain: the dollar shortage in Europe is now as bad as it was just after the first Greece insolvency, when nobody was prepared for the bank lockup that followed. Additionally, with deposit loans at the ECB soaring to €182 billion, a runrate which will promptly surpass last month's high, it is once again all too clear that there is no free liquidity in Europe, and that the thesis presented by Zero Hedge over the weekend, that the only reason for the persistent high level of the EUR is due to the sale of USD assets by French banks and subsequent FX repatriation, is what explains the ongoing schism between the European market, which is driven by wholesale asset sell offs by French banks, and the American one, which is electronically trading with 100% correlation to the EURUSD which is sending a completly false "all clear" signal to the market.

Historical New York Fed swap line usage:

And the just released Fed data:


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Thu, 10/20/2011 - 16:41 | 1794667 tekhneek
tekhneek's picture


These numbers will only get higher and higher and they'll eventually just stop reporting it, and if they do, it will be a much smaller number than it is in reality.

I have a hard time believing this hasn't been going on for some time now behind the scenes.

Tip of the iceberg... 

Thu, 10/20/2011 - 16:58 | 1794770 metastar
metastar's picture

It's just a speed bump in the North Atlantic.

Thu, 10/20/2011 - 17:57 | 1794948 Max Hunter
Max Hunter's picture

That's pocket change... show me some real numbers... you ain't shit..

Thu, 10/20/2011 - 20:05 | 1795448 Matxeu
Matxeu's picture

Holy fiat! Dollar swap lines are rising. Guess it's time for another Keynesian- 3 ounces of Bombay sapphire, 3 slices of lime, 3 ice cubes frosted with sugar on top- actually better to remain 'austere.'

Thu, 10/20/2011 - 23:05 | 1795820 Prometheus418
Prometheus418's picture

Damn, that sounds good.

Fri, 10/21/2011 - 00:37 | 1795974 Matxeu
Matxeu's picture

'tis.  think i will have another...

Thu, 10/20/2011 - 16:33 | 1794677 J 457
J 457's picture

Bank loans presumably taxpayer/depositor $ to institutional funds who then buy bank shares.  What a racket....


€1.5bn Dexia loans used to buy shares in ... Dexia
Dexia, the stricken Franco-Belgian lender that has been at the centre of recent market turmoil, loaned €1.5bn of fresh capital to its two largest institutional shareholders which then used the cash to buy Dexia shares before 2008, the Financial Times has learnt

Thu, 10/20/2011 - 16:33 | 1794678 TheSilverJournal
TheSilverJournal's picture

Lesson Euro / USD swaps if your unfamiliar:

Thu, 10/20/2011 - 16:34 | 1794681 achmachat
achmachat's picture

stop posting news and charts from an alternate universe!

Thu, 10/20/2011 - 16:34 | 1794685 Quadlet
Quadlet's picture

Ok, sick of waiting for the Tylers to do it so I put this together:

European Bailout Log

10/18/2011 - 10:23

10/18/2011 - 10:31

10/18/2011 - 13:53

10/18/2011 - 14:20

10/18/2011 - 15:16

10/18/2011 - 16:00

10/19/2011 07:13 -0400

10/19/2011 - 09:22

IN? / OUT?
10/19/2011 12:00 -0400

10/19/2011 - 14:09

10/19/2011 - 14:50

IN? / OUT?
10/19/2011 - 15:22

10/20/2011 - 07:34

10/20/2011 - 08:58

10/20/2011 - 09:12

10/20/2011 - 09:31

10/20/2011 - 09:34

10/20/2011 - 10:32

10/20/2011 - 10:41

10/20/2011 - 12:14

10/20/2011 - 13:40

Thu, 10/20/2011 - 16:39 | 1794698 MsCreant
MsCreant's picture

[Fake porno actress breathing and moaning].

"Oh baby, you're sooo good!!"

Fri, 10/21/2011 - 00:36 | 1795970 Problem Is
Problem Is's picture

"OUT AGAIN" Not Sooo Good

Out again soooo many times, he's either a Cheese-Dick-Wanker Timmah Geithner and can't keep it in...

Or he's as blind as a Baldy Bernank and can't find it...

There's no third way...

Thu, 10/20/2011 - 16:40 | 1794705 NDXTrader
NDXTrader's picture

Brilliant! My only suggestion would be to add the leverage portion of each rumor...5x IN

Thu, 10/20/2011 - 16:42 | 1794712 LawsofPhysics
LawsofPhysics's picture

Yes please,  this is the "oh God, its so big" part of the script above.

Thu, 10/20/2011 - 16:34 | 1794686 redpill
redpill's picture

Those $500 million draws just practice runs I guess

Thu, 10/20/2011 - 16:52 | 1794751 topcallingtroll
topcallingtroll's picture

True. That is probably just enough to meet payroll.

Uh oh.

Thu, 10/20/2011 - 16:35 | 1794687 lizzy36
lizzy36's picture

Perception becomes reality until reality kills perception.

Fri, 10/21/2011 - 00:38 | 1795977 Problem Is
Problem Is's picture

They don't call'em smoke and mirrors for nothing, Hun...

Thu, 10/20/2011 - 16:36 | 1794691 wandstrasse
wandstrasse's picture

buy, buy. I am going to bed now.

Thu, 10/20/2011 - 16:39 | 1794700 ziggy59
ziggy59's picture

Perception deception..

Thu, 10/20/2011 - 16:40 | 1794702 ArkansasAngie
ArkansasAngie's picture

Now boys ... don't you go giving my money to a bunch of indebted Euro holders.

Honestly ... I almost hope Geithner and Ben and Obama go ahead and give our money to Europe.  It'll be the last things they do and the thing they'll go down in history for

Pitchforks ... get your pitchforks right here.

BTW:  I also have matching tin foil hats at a very reasonable price.

Thu, 10/20/2011 - 16:40 | 1794703 LawsofPhysics
LawsofPhysics's picture

Still not to Jan 2009 levels.  Plenty of paper to move. I guess things would be different if we ever got physical and weren't moving cyber bits around.

Thu, 10/20/2011 - 16:40 | 1794704 bernorange
bernorange's picture

I pat your back and you pat my back.  Everybody's happy.

Thu, 10/20/2011 - 16:41 | 1794709 LawsofPhysics
LawsofPhysics's picture

Again, time to get those inflation trades lined up.

Thu, 10/20/2011 - 16:43 | 1794713 tekhneek
tekhneek's picture


Thu, 10/20/2011 - 16:49 | 1794742 LawsofPhysics
LawsofPhysics's picture

any physical asset or interest bearing investment.  Silver looks good too.

Thu, 10/20/2011 - 16:58 | 1794774 topcallingtroll
topcallingtroll's picture

No way.

Gold and silver have topped out.

Thu, 10/20/2011 - 16:42 | 1794714 buzzsaw99
buzzsaw99's picture


Thu, 10/20/2011 - 16:43 | 1794715 Poetic injustice
Poetic injustice's picture

Now I understand shipping manifests increase. It's all pure dollars.

Thu, 10/20/2011 - 16:44 | 1794718 Hephasteus
Hephasteus's picture

Speaking of false signals.

Gold and silver has the weirdest boner right now.

Thu, 10/20/2011 - 16:44 | 1794719 Ghordius
Ghordius's picture


The 2nd part connects to the theory that the bots are not under sufficient human control?

Thu, 10/20/2011 - 16:46 | 1794724 Irish66
Irish66's picture

US is only dollar swap, who else are they swapping with?

Thu, 10/20/2011 - 16:46 | 1794726 Vincent Vega
Vincent Vega's picture

$1.9B just doesn't even sound like a lot any more.

Fri, 10/21/2011 - 11:55 | 1794754 fuu
fuu's picture

Even levered up 50:1 it's still just a rounding error.

Thu, 10/20/2011 - 16:46 | 1794728 ziggy59
ziggy59's picture

Silver the new white meat

Thu, 10/20/2011 - 16:47 | 1794731 drand02
drand02's picture

Wonder what the US public reaction would be if they new how the money is really being used? Kinda like when you hear about the IMF being part of the solution and knowing 22%? or so comes from the US tax payers.

Thu, 10/20/2011 - 16:54 | 1794759 Belarus
Belarus's picture

long "false clear." And strangely, it is creating a unique feedback loop.

Thu, 10/20/2011 - 17:00 | 1794781 ziggy59
ziggy59's picture

Drand, the public is so numb and neutered /castrated etc.. they wouldn't care if they did know.. If their star is still on dwts, or the real Botox and fake boobs of NYC, then they are fine.

Thu, 10/20/2011 - 17:01 | 1794782 MaximusR
MaximusR's picture

This is all one big FARCE!!!!! FML

Thu, 10/20/2011 - 17:02 | 1794786 Mark123
Mark123's picture

Why cab't the Europeans just lie and say they have 100 trillion $US....but nobody is allowed to audit it.

Thu, 10/20/2011 - 17:06 | 1794792 bob_dabolina
bob_dabolina's picture

Short gold/silver

Long fiat king dollar

Thu, 10/20/2011 - 17:05 | 1794795 ziggy59
ziggy59's picture

Max... Did u mean one big FUBAR?

Thu, 10/20/2011 - 17:13 | 1794816 slewie the pi-rat
slewie the pi-rat's picture



so, that 84-dayz out outa be abt when the 100-day given to the banksters earlier runs out--january next year;  maybe it is part of the same deal, now being taken abooard the ECB sister-ship just in case the natives party too hard, this weekend, here or there, or perhaps some banksters will need it to stay afloat soon...

stay tooned!

Thu, 10/20/2011 - 17:35 | 1794891 Bold Eagle
Bold Eagle's picture

Meanwhile, Belarus devalued it's currency by 52% overnight and by 289% since January 1st, 2011. Fiat currency is the easiest way to rob the people. Gold topped out? No way!

Thu, 10/20/2011 - 22:28 | 1795754 JLee2027
JLee2027's picture

Until Merkel comes out and says that, it's just another endless rumor.

Fri, 10/21/2011 - 03:19 | 1796140 fredquimby
fredquimby's picture

And then it's just an official rumour

Thu, 10/20/2011 - 17:50 | 1794921 Sigma X
Sigma X's picture

Nothing to see here, please keep moving....

Thu, 10/20/2011 - 19:21 | 1795306 tim73
tim73's picture

YES! AMERICANS AGREED TO PAY THE BILL! Waitress, bring the most expensive champagne bottle you got!

Thu, 10/20/2011 - 22:31 | 1795758 zeroman
zeroman's picture


Fri, 10/21/2011 - 03:21 | 1796137 fredquimby
fredquimby's picture

In the week ending 14 October 2011 gold and gold receivables (asset item 1) remained unchanged.


The net position of the Eurosystem in foreign currency (asset items 2 and 3 minus liability items 7, 8 and 9) increased by EUR 0.9 billion to EUR 191.9 billion on account of customer and portfolio transactions and US dollar liquidity-providing operations (see below).


13 October 2011 - 7-day US dollar liquidity-providing reverse transaction - Maturing amount USD 0.5 billion - New amount - USD 0.5 billion

13 October 2011 - 84-day US dollar liquidity-providing reverse transaction - Maturing amount - 0 New amount - USD 1.4 billion 


The liquidity-providing transactions were conducted by the Eurosystem in connection with the temporary reciprocal currency arrangement (swap line) that the European Central Bank has with the Federal Reserve System.




Fri, 10/21/2011 - 08:28 | 1796383 fredquimby
fredquimby's picture

Incase anyone was wondering:

The swap lines are temporary reciprocal currency arrangement between the Federal Reserve and the ECB, whereby the Federal Reserve makes US dollar liquidity available to the ECB while the ECB makes euro liquidity available to the Federal Reserve for distribution, when needed, to their respective counterparties.  In this way, the figure you cite is US-dollar liquidity provided by the ECB to euro area financial institutions, through a regular weekly facility and one three-month tender.  In the same way, the Federal Reserve can provide euros to its own counterparties if the need should arise. 



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