Global Dollar Liquidity Freeze Leads To Pervasive Sell Off

Tyler Durden's picture

Just two charts confirming that we have entered a complete USD liquidity lock up, and that the global coordinated USD swap line rescue operation will be launched any minute: both the US FRA-OIS and the EUR Basis Swap are at multi year extremes. The entire dollar funding market is now at levels not seen since the Lehman collapse and is effectively frozen. Only this time it is much, much worse as never before has the global central bank cadre been assumed and implied to be backstopping the global liquidity cascade. Ex-out the implied backstop by the monetary authorities, and liquidity is now locked up more than ever in the history of capital markets. The liquidity crunch explains why everyone is liquidating the one asset that is performing best YTD to procure much needed dollars - gold.



And the EUR Basis Swap:

Charts: Bloomberg

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flacon's picture

Paper gold, none the less...

TruthInSunshine's picture

Open swap lines, Bernank, Open swap lines!

Print, Trichet! Print!

[Voiceover by the actress playing young Jenny Curran in Forrest Gump]

Basic arithmetic just called and said there can be no happy ending, no matter The Bernank, The Trichet, The Merkel, Sarkozy or Dudley does/says, and no matter what the CEO of Jeffries, Mr. Dick Handler, claims, and that when it comes to CONfidence games, mathematics ultimately and always is in control of the show.


*Barton Biggs just heard of two stocks with the ticker LNKD and GRPN that he says will be the Standard Oil of the 21st century and he's double-fisted buying (he claims he'll even sell his shares of The East India Trading Company to raise cash if need be).

**Abby Joseph Cohen announced, via satellite feed somewhere on Lord Blankfeins Bug Out ranch/compound in Paraguay, that she sees a lot of upside potential for the global economy and equities, and is therefore, quite bullish.

***A whole slew of wannabe Stevie Cohens, seeing the fix that Stevie Cohen is in, just announced that they're sick of client redemptions flowing in hot & heavy, that they "should've went to med school," and are taking their ball home while acknowledging that there still will be a highly rigged game (that they're implicitly admitting they don't have any influence over, no matter how large their AUM) despite their lack of participation in it.

****Steve LIESman just tweeted that it's important, despite what is actually the very scary reality of the economic times, for The Bernank to perpetuate CONfidence, and he's upset with Mark Zandi, Christina Romer, Austan Goolsbee, and last, but not least, his cohorts at cnBSc for not doing a better job at doing so.

The Big Ching-aso's picture



Are there any greater fools left or have they all left the building?

johngaltfla's picture

Yes. Stay tuned for the Supercomittee next Wednesday. Lots of greater fools devising lies there.

Got FAZ?

trav7777's picture

silver is getting absolutely destroyed.  I guess $60 isn't happening next week anytime soon.

A lot of bagholders been created by silver pumpers lately

akak's picture

Which pumpers, exactly, lately?  And "bagholders"?  What a blinkered, short-term mindset you have.  It ain't over until the fat lady sings --- and, I hope, stomps the shit out of your scrawny ass.

Greenspan Shrugged's picture

Next stop gold at $1450 bitchezzz!

DosZap's picture

Greenspan Shrugged


 Next stop gold at $1,450 bitchezzz!


Great, will be online and ordering like a SOB.(<:

Jendrzejczyk's picture

My back is so scarred, the beatings no longer hurt.

oldman's picture

I only wish I could give the number of greens you deserve

Thanks for the lightness!!!!    om

Saro's picture

I rushed to my safe to make sure the paper price adjustment didn't cause my physical silver to suddenly dissolve into the air.

Nope, still there. Phew. Guess I'm not a bagholder then.

jonan's picture

lol, almost sharted when i read that...

trav7777's picture

ur stack is buying less of everything else today, bagholder

Saro's picture

Only if I'm selling it today, shithead.

trav7777's picture

ah the old canard of bagholders "my account value isn't 0 because I haven't pressed the sell button"

akak's picture

I always wondered what the hybrid offspring of a douchebag and an asswipe would look (and act) like.

I wonder no longer.

tmosley's picture

Eh?  When did silver go to zero?

I want to buy an infinite amount at that price.

TruthInSunshine's picture

I've offered $5 plus an additional bonus of $10 for each ounce of silver someone- anyone - wishes to dig from my back yard, and I've had no success finding any takers.

Lazy farkers.

Saro's picture

You're expecting silver to go to zero? Let me know if you have any to sell at that price.

I don't care what silver trades for today or tomorrow.  I might care what it trades for in six months or a year, but until I do the daily price is meaningless noise, and I haven't actually gained or lost anything until I pull the trigger.

This isn't rocket science.

Jack Napier's picture

Hypothetical scenario: Silver goes to $5/oz, and the USD goes to toilet paper. Which would you rather have. I sure wouldn't put that dirty coke money in my rear. Fire starter maybe.

fuu's picture

Today being the only operative word in that comment.

akak's picture

ur stack is buying less of everything else today, bagholder

Behold the sound of one brain cell yapping.

tmosley's picture

What, you mad that all your silver is going down in value, Trav?  Why didn't you sell when you were talking so much shit?

Could it be that you are a contemptable hypocrite who wants everyone to be poor or dead so they can't use any of your precious oil?

trav7777's picture

i've been thinking...there is no credible way that anybody could be as stupid as you continually appear to be, so you simply have GOT to be a shill for someone trying to create lots of silver bagholders.  It's either that or you actually DO believe the moronic stuff you type, in earnest.  I'm just not willing to believe yet that anyone could possibly be that dumb.  Convince me.

akak's picture

As bitter and hateful as you continually are, it must really suck to be you.

trav7777's picture

nah it's actually awesome to be me.

I guess I am a bit of a bagholder; I just bought some silver...cufflinks.  From Hermes.  Just to celebrate being awesome

tmosley's picture

So awesome your wife and kids left you?

I guess they were jealous of your awesomeness.

Your life is pretty shitty, dude.  You just can't admit it because that would require that you take some fucking responsibility for your situation.

trav7777's picture

huh?  kids are right here dude, the wife i had to get rid of

You're pretty brazen for a dude who wants to stack silver and lord it over starving people

DollarMenu's picture

You know trav777, sometimes you act like an inflamed hemorrhoid,

you hang out just waiting to get irritated.

You can be really annoying and disruptive.

I can see why you can't keep a wife.

I pity your kids.

Not For Reuse's picture

Maybe there's hope for you yet. I assume you are buying new, at a retail store, because you feel like it. Not on CL, and not just because it's some random crap being liquidated

tmosley's picture

How can I convince you of ANYTHING when you hear only what you want to hear, and know only what you heard?

trav7777's picture

well, you managed to convince me that you're pretty frickin stupid, so don't sell yourself short, man

akak's picture

Congratulations on your graduation to full fuckwad troll.

You can expect automatic red arrows from me for your every comment from now on.  You've proven yourself to be little more than a divisive, hate-filled, narcissistic troll and complete asshole.  Thank you for allowing me to skim over each one of your posts as irrelevant going forward.

trav7777's picture

oh nooooooooooooooooo

the mighty AKOCK is going to click my red arrow...wtfever will I do? How will I live??  How will I find the strength to carry on?

oldman's picture

Come on, dudes

This is too much fun to be a carrying on so

You two sound like a couple of brothers of mine

The sun is shining even on the other side of the world

Always shining that sun

the organic shit is happening and we are a part of it

What a great fucking day even if my pocket is not so full as it was                 om


Lux Fiat's picture

"Open swap lines, Bernank, Open swap lines!

Print, Trichet! Print!"

Geithner got a very cold shoulder several months ago when he went preaching the US "monetary" gospel of Bernanke to the EU.  Given that he used to run the NYFRB, I wonder if the Fed is going to let the EU twist a bit before doing more to "help out". 

baby_BLYTHE's picture

Trichet no longer has control over the EZ printing press

Lux Fiat's picture

Well aware of Draghi's comings, and Smaghi's goings.  Take it up with Truth in Sunshine.

TruthInSunshine's picture

Right; Trichet doesn't have control of the ECB printing press unless Merkel & her loyalists put the German People on the open spit and roast them toasty in lieu of the PIIGS(+France) that should be roasted given the way the EU Member States have governed themselves since this brilliant idea (/s) of a union between nations as different as Germany & Italy was hatched and implemented.

But if the German People allow themselves to be sacrificed to the bottomless pit welfare states that are PIIGSFUK (PIIGS+France+UK), well then, Trichet will be a busy little printer.

Alea Iactaest's picture

Is it time for the asset sales to raise liquidity to commence? How low is low?

DormRoom's picture

ppl had 15 years to participate in the bubble(s).  All that wealth was phantom wealth (bubble wealth), and unsustainable.  Now, we revert back to the mean, and 'real' price discovery, unless Central banks intervene, forcing future adjustments to be more severe.  So wealth preservation is the priority.  Anyone owning risk will be steamrolled.

mfoste1's picture

correct, that is what SHOULD happen....however it will not, because the fed will pull out all the stops to keep markets from reverting to pre bubble mean

Caviar Emptor's picture

You don't get it. If they do that the cost-structure of owning the same assets explodes. That alone further depresses asset values like real estate, most people's #1 wealth asset. And margins get squeezed across the board, requiring further downsizing and offshoring. Finally capital flies overseas

Caviar Emptor's picture

Yes. Can you imagine how many yuppies and wannabes are locked into unrealistic cost structures based on pre-crisis asset prices? And they're being squeezed by rising input prices

TruthInSunshine's picture

The yuppies & wannabes were last heard booking their limited time promotional 'Want To Get Away?' flights to fantasy island courtesy of Southwest Airlines (also known as The Bernank Special).

The real inner sanctum already have their private jets fueled & waiting to be fired up and their compounds ready in places like Paraguay and certain patches of very rough terrain in Colorado.


In the end, The Bernank will be known as the boy who blew bubbles so that very important friends of the New York Branch of the Federal Reserve Bank could hitch their rides to the last opportunity to suckle the remaining lifeblood of taxpayers

Basic Math says:

"Just like the mother in the movie 'Blow,' the inevitable process that has to occur, global deleveraging, on a scale at least equal to (actually far more so given mark-to-fantasy valuations  and leveraging gamesmanship) the circa-1981 through 2011 credit fed and central bankster sponsored debt bubble, is a complete and total bitch."


Caviar Emptor's picture

We're totally on the same wavelength. Uber yuppies have their bugout bags packed. Average yuppies are stuck with feet in concrete, struggling to keep what they have. 

The circa 1981 Fed made it policy to stripmine the US productive economy and replace it with financialized KoolAid. Build massive overcapacity and slash median wages to offset money printing on a massive scale. They were just lucky that an oil shock didn't happen sooner

ffart's picture

So your thesis is that after 90 years of intervening markets, the Fed will just stop all the sudden and things will go back to how they were? If they stop intervening it's just your queue that there's no longer any possible hope of the US dollar continuing to exist and to start emptying shelves at the supermarket.

TruthInSunshine's picture

No, my thesis is that the Federal Reserve 'Bank' is pushing on a string, pulling on a thread, shouting down a well/rabbit hole, and that its demise has already been planned, given what is to transpire, and that its successor has already been formed and is waiting in the wings, with a similar mission statement, only to be carried out with a more global focus and more global authority (think SDRs and other 'world weighted' things, etc.).