French Banks Resume Tumble After ECB Announces One Bank Taps Dollar Swap Line For $500 MM Again

Tyler Durden's picture

The French bank trio is once again on the ropes, with BNP leading the decliners at -5%, following the latest weekly Fed swap line release update from the ECB according to which one bank had subscribed for $500 million of dollars at emergency funding, confirming that anything coming out of the Libor market (where the average rate increased once again from 0.355% to 0.356% for the nth day in a row) is pretty much irrelevant as no real dollar access is available at rates below the ECB's penalty rate which this week was 1.07%. The good news: this is not as bad as last week's two banks which needed $575 million. The bad news: we have reverted to the regime from a month ago when a bank, most likely the same bank, was forced to borrow from the ECB, and hence, from the Fed. Said otherwise, there has been no improvement in interbank liquidity conditions since August 17. Expect more weakness out of French banks especially if China steps up the war of rhetoric and announces that more (of its own massively levered) banks have cut liquidity connections with France.

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markmotive's picture

Lehman 2.0 will be the tipping point that pushes the developed world into a hyperinflationary abyss

Snidley Whipsnae's picture

markmotive... Wake me when the velocity of money increases significantly. Until then, we will have inflation under 10%... which is bad enough.

markmotive's picture

Deflation is the precurser to hyperinflation.

oobrien's picture


You must be joking.

We're heading for a crippling deflationary depression.

Get your shit straight, boy.

wombats's picture

Hyperinflation?  Deflation?  Panic?  What a wonderful way to start the day. <snarc>

wombats's picture

Oops.  Double post.  Sorry..

Debugas's picture

i think James Rickards put it in the most clear way - there are two gigantic forces fighting each other at play here.

We have the huge debt deflationary force and the central bankers printing presses' inflationary force. We can have both high deflation and high inflation depending on what they decide to do. For the time being however the policiy seems to be to keep disinflation or mild inflation as long as possible (Japan style lost decade or two anyone?). The difficulty with that is that some people do not have debts and they accumulate more money and they (independently of what bankers want) can decide at some point to start spending and increase velocity of money dramatically


Jim Rickards - Economics and National Security

at 2min 30sec

mick_richfield's picture

Hyperinflation?  Deflationary depression?

I'm starting to think that the argument between these two possibilities is similar to knowing that we are about to get nuked, and arguing about whether we will be killed by the fireball or by the shockwave. 

For the sake of preparation, it probably makes more sense to focus on what the two possibilities have in common:

For the productive economy: the Greater Depression.

For the financial economy: Armafrikkingeddon.

Probable collapse of imports, including oil. 

Energy shortages.

Food shortages.

Large-scale distribution failures.

Political upheaval greater than at any time since the Civil War.

Loss of the Empire.

The Republic in danger.

Did I miss anything?


markmotive's picture

...and what do you think the central banks will do when the risk of a deflationary depression materializes? They will print like never before and monetize anything you can touch.


Snidley Whipsnae's picture

'dollar swap lines' = more fucking paper

The printers/computers are turned on and out pops more digits...

Who really gives a shit about this?

Who really believes that the US is in better financial condition than Greece?

Fuck the banker parasites... Liquidate them all!

Got gold?

HelluvaEngineer's picture

Did anyone catch the CNBC interview with the President of Iceland yesterday afternoon?  I heard it on XM.  Anyway, he was asked how Iceland rebounded so quickly.  Answer: they let the banks fail.

I was kinda surprised that part wasn't edited out.  Kinda set the tone for the whole interview.

william shatner's picture


Gandalf6900's picture

wonder who might that be...le petit frog

oobrien's picture

Hey, motherfuckers.

The sun will come out tomorrow.

Now get out there and start shopping!

That's an order, Mister.


jimijon's picture

How do banks make money?

They have all the prime real estate here in US Cities. So the overhead can't be small.

They don't give loans out, housing is still collapsing, and then fat finger traders lose 2 Billion.

Do they just gamble now? OR is all just credit card interest that keeps Mr. Cash Flow away from the door?


Snidley Whipsnae's picture

Student loans... It's easier to rip off the young and inexperienced.

The student loan portion of revolving credit is increasing while credit card debt for consumer items is level or declining.

Student loan debt is for life or until paid off... cannot be dumped in bk proceeding.


max2205's picture

What's the biggie about a loan between friends ?

DrunkenMonkey's picture

Temporary liquidity to infinity and beyond !

falak pema's picture

the french central bank has a mighty liquidity pump as does ECB. So I wouldn't worry about these virtually "nationalised" french banks. They are like Citi, BofA and Bank of Scotland after the 2008/2009 collapse. 

youngman's picture

There has to be a run on the banks going on right now...time will tell if I am right...

Snidley Whipsnae's picture

I have lots of dollars and PMs ... but none of them are in a bank... except the min to pay monthly bills.

I doubt that I am alone...

chistletoe's picture

for the last couple of years

the #1 way the banks have been making money

is to borrow short-term money at 0% interest fro the Fed

and loan it back to the US govt in longer term treasuries.


Operation twist will kill their last bonanza ....

Lord Welligton's picture

BNP leading the decliners at -5%

Why don't they hire some "scientists" from the University of East Anglia to "hide the decline".

Snidley Whipsnae's picture

And here comes the central bank beat down of PMs...

Can't have gold over $1,800 while the azz hats are meeting today...

Sudden Debt's picture

SO: Siemens get their 500 million back and MOVES it to the ECB.... and the ECB moves 500 million to the banks....