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Fed Swap Line Tapped Again - Eurobank Funding Concerns Surge After Two Banks Borrow Dollars From ECB

Tyler Durden's picture




 

About a month ago, European USD funding concerns came to the fore with a bang after one bank had borrowed $500 million dollars from the ECB in a 7 day operation, indicating that, as had been documented before and after courtesy of a rise in Libor that has yet to see a down day in the last 40, dollar funding is becoming a threshold factor (for at least one bank). Well, today we learn that 3M USD Libor, which just rose yet again to 0.349% from 0.347% (with perpetual outlier Credit Agricole finally caught up by the little Swiss bank that could CSFB, see below) has become a prohibitive funding mechanism yet again, after the ECB just announced that following 3 weeks of quiet, not one but two banks were "forced" to borrow $575 million from the ECB  (the most since June 2010) which in turn had to resort to using the Fed's swap line - expect to see the appropriate number in the FRBNY's swap line ledger with the ECB and the Fed's H.4.1 next Thursday when this data is updated on the US side. Basically despite the market rallying on news that the Moody's downgrade of French banks was "better than expected" the truth is that the situation continues to get step wise worse.

And self-reported 3M USD Libor by bank. Not good if one has cash in CSFB:

 

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Wed, 09/14/2011 - 07:18 | 1667764 Irish66
Irish66's picture

Markets are happy

Wed, 09/14/2011 - 07:22 | 1667765 HelluvaEngineer
HelluvaEngineer's picture

Well, looks like another China rumor was all it took to crank futures.   Again.  I give up.

This will continue until the lights go off at European banks.

Wed, 09/14/2011 - 07:24 | 1667767 GeneMarchbanks
GeneMarchbanks's picture

'Basically despite the market rallying on news that the Moody's downgrade of French banks was "better than expected" the truth is that the situation continues to get step wise worse.'

Yes, worse, I'm seeing that there isn't any alternative other than MOPE. They can't bullshit people forever. It all depends on which 'reality' you're plugged into, the 'Market' or your everyday street experience. Hint: one of them is viciously anti-reality.

Wed, 09/14/2011 - 07:25 | 1667768 Popo
Popo's picture

Rules:

1. Policy is made by policy makers.

2. Policy makers are paid by banks.

 

Corollaries:

1. The public is easily lied to.

2. There are no penalities for lying.

 

 

 

 

Wed, 09/14/2011 - 07:37 | 1667789 LongSoupLine
LongSoupLine's picture

Again, Joseph Goebbels comes into the spotlight...

“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”

“Think of the press as a great keyboard on which the government can play.”

Wed, 09/14/2011 - 09:36 | 1668147 spanish inquisition
spanish inquisition's picture

Correct and if I may expand on this a bit.

The Fed is a private corporation and mandates aside, its first duty is to the shareholders by delivering value. To do that, it will first need to save itself by utilizing the tools at hand. The same investors also hold interest in the  the distribution system (i.e. Wall Street) which also will need to be saved.

The distribution system owns the policy makers (The US Senate, House and regulatory agencies). I remember previous US criticisms regarding crude tribal corruption in Afghanistan. We weren't upset about the corruption, but that it was inefficient and was contradicting our own corrupt deals. The whole country was already divided up with our smooth campaign contribution, junket and future job efficient corruption. We had already called "dibs".

Next, you have to have reasons to justify your actions to the masses. That is where economists and journalists come in by allowing them to be one of the gang. They get paid well, feel like they are part of the elite and generally are useful idiots. You just need to change the "science" of ecomonics a bit. Best to up security on all fronts to protect yourself from the people, but make sure you explain that you are locking them down to preserve their freedom.

If things work out and the Fed is saved, the bill is passed to the people. If things don't work out a war is started to cover the tracks of what  and who landed us here and the bill is passed to the people. Generally speaking, modern war has been perpetrated against countries that printed their own money and there are only a couple left...

Wed, 09/14/2011 - 07:27 | 1667773 hugovanderbubble
hugovanderbubble's picture

1.SOCIETE GENERALE

2.DEXIA

 

GAME ENDS....

Wed, 09/14/2011 - 07:30 | 1667777 GeneMarchbanks
GeneMarchbanks's picture

Numero uno = will be merged. Numero dos = nationalized. Fixed. Questions?

Wed, 09/14/2011 - 07:34 | 1667783 hugovanderbubble
hugovanderbubble's picture

Nationalized¡...

No please no more Hyporealestates¡

Wed, 09/14/2011 - 07:39 | 1667791 hugovanderbubble
hugovanderbubble's picture

What about

1.Credit Suisse

2.UBS

3.Credit Agricole

 

More Mergers;More Buffets?, more nationalizations?:)

 

Wed, 09/14/2011 - 07:27 | 1667775 TradingJoe
TradingJoe's picture

Algos don't know nothing about swap lines or other accounting shenanigans, algos know about hope and change!
Trying hard to keep ice from melting here...in the tropics!!! It will all come to a boil, soon! My understanding of the crash is NO ONE AND NO ASSET CLASS WILL BE SPARED THE FOLLOWING INTERVENTION WON'T DO MUCH EITHER AS IT WOULD BE TOO LITTLE TOO LATE!

Wed, 09/14/2011 - 07:34 | 1667784 papaswamp
papaswamp's picture

Save some for me...I will be there shortly.

Wed, 09/14/2011 - 07:34 | 1667782 Paralympic Equity
Paralympic Equity's picture

Today the only thing surging is the market, and EUR...no room for stress today, it's rally time

Wed, 09/14/2011 - 07:36 | 1667785 Irish66
Irish66's picture

Can you show the Greeek 5 year, its something else.

Wed, 09/14/2011 - 07:41 | 1667788 slewie the pi-rat
slewie the pi-rat's picture

today's action & "adjustments" in crimex bullion banking is here: DJ Comex Gold And Silver Warehouse Stocks-Sep 13

  • about 150,000 ounces of gold out the door for the day and
  • 34,000 oz Au moved to delivery-ready
  • about a million, 1,000,000 oz silver less in the total crimex pile today and
  • 380,000 oz Ag moved up to ready-to-deliver status
Wed, 09/14/2011 - 07:38 | 1667790 Dick Darlington
Dick Darlington's picture

Markets started to rotten this morning and bunds were bid. So what does a crooked EU-politician do? Shout eurobond as loud as u can. And the "markets" turn, again, on hot air. Eurobonds will never happen yet these same politicians from the european banana republics are screaming louder than ever. It's abt the time to put an end to this sad political daydream called EU and Euro.

Wed, 09/14/2011 - 07:49 | 1667803 slewie the pi-rat
slewie the pi-rat's picture

just the rope-a-dope so far in equities for europe with some nice, reasonable +'s from maybe being "oversold"...

...and asia a mirroringly weak...

maybe this will turn into the "short squeeze, but 2 days b4 expiry?  anything's possible, right? ...heading into fractal friday?

Wed, 09/14/2011 - 09:10 | 1668017 Belarus
Belarus's picture

Last night I wrote: Futures down which means nothing more than to expect a headline twist to ramp market up to at least 2% today....and just so. 

This market will not go down......until it crashes in one full swoop. It's just the way things go when it's all hanging by a thread.

Thu, 09/15/2011 - 12:01 | 1673642 rwe2late
rwe2late's picture

 Isn't it the case that these are not straight currency "swaps", but are short-term dollar loans to EURO CBs unable to print their own US petrodollars?

The EURO CBs, in turn, may loan out the dollars to risky clients and insolvent governments requiring them to pony up more assets and collateral such as "austerity" and increased taxes to repay. Who needs the IMF when a massive Fed pay-day loan scheme will do?

 

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