Here Comes The Global, US-Funded Liquidity Bail Out

Tyler Durden's picture

As expected, the Fed has just bailed out the world once again:

  • FED, ECB, BOJ, BOE, SNB, BANK OF CANADA LOWER SWAP RATES - BBG
  • ECB, FED other major central bank to lower the pricing of existing USD liquidity swaps by 50BPS

And as we have been writing every single day, the worldwide dollar crunch is now confirmed:

  • At present, there is no need to offer liquidity in non-domestic currencies other than the U.S. dollar

And finally, a promise to bailout Bank of America when it hits $4.00 again:

  • U.S. financial institutions currently do not face difficulty obtaining liquidity in short-term funding markets.  However, were conditions to deteriorate, the Federal Reserve has a range of tools available to provide an effective liquidity backstop for such institutions and is prepared to use these tools as needed to support financial stability and to promote the extension of credit to U.S. households and businesses.

This means that the global situation is far, far more dire than the talking heads have said. Luckily, when this step fails, which it will, Mars can always come and bail us out.

For release at 8:00 a.m. EDT

The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing coordinated actions to enhance their capacity to provide liquidity support to the global financial system. The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity. 

These central banks have agreed to lower the pricing on the existing temporary U.S. dollar liquidity swap arrangements by 50 basis points so that the new rate will be the U.S. dollar overnight index swap (OIS) rate plus 50 basis points.  This pricing will be applied to all operations conducted from December 5, 2011.  The authorization of these swap arrangements has been extended to February 1, 2013.  In addition, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank will continue to offer three-month tenders until further notice.

As a contingency measure, these central banks have also agreed to establish temporary bilateral liquidity swap arrangements so that liquidity can be provided in each jurisdiction in any of their currencies should market conditions so warrant.  At present, there is no need to offer liquidity in non-domestic currencies other than the U.S. dollar, but the central banks judge it prudent to make the necessary arrangements so that liquidity support operations could be put into place quickly should the need arise.  These swap lines are authorized through February 1, 2013. 

Federal Reserve Actions
The Federal Open Market Committee has authorized an extension of the existing temporary U.S. dollar liquidity swap arrangements with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank through February 1, 2013.  The rate on these swap arrangements has been reduced from the U.S. dollar OIS rate plus 100 basis points to the OIS rate plus 50 basis points.  In addition, as a contingency measure, the Federal Open Market Committee has agreed to establish similar temporary swap arrangements with these five central banks to provide liquidity in any of their currencies if necessary.  Further details on the revised arrangements will be available shortly.

U.S. financial institutions currently do not face difficulty obtaining liquidity in short-term funding markets.  However, were conditions to deteriorate, the Federal Reserve has a range of tools available to provide an effective liquidity backstop for such institutions and is prepared to use these tools as needed to support financial stability and to promote the extension of credit to U.S. households and businesses.

Information on Related Actions Being Taken by Other Central Banks
Information on the actions to be taken by other central banks is available on the following websites:

Bank of Canada

Bank of England

Bank of Japan

European Central Bank

Swiss National Bank

Frequently Asked Questions: Foreign Currency Liquidity Swaps

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AngryGerman's picture

Bail out wednesday bitchez!!

Turd Ferguson's picture

Game on. Nice to see a spike up in the PMs for once.

Chris Jusset's picture

"This means that the global situation is far, far more dire than the talking heads have said. Luckily, when this step fails, which it will, Mars can always come and bail us out."

Bring it on!  Mars to the rescue.

Mae Kadoodie's picture

Uranaus has more strength than Mars.

Chief KnocAHoma's picture

Turd,

You have been calling the end to this Keynsian experiment for a while now, but every time the cliff gets close, they wiggle out.

This has been going on for years now and I fear we will be given the slow morphine drip for decades more.

This can will continue getting kicked. There are many more manuevers the CBanks can take to continue the ponzi. Just think of all the countries in Africa that not integrated into the debt slavery machine.

 

Chump's picture

It seems like it will stretch forever because we're right smack dab in the middle of it.  When we look back, we'll wonder at how fast it happened.

Smiddywesson's picture

Yes, and we are accelerating towards that point.  $707 trillion derivatives, up $107t in just the last 6 months.  At a +30% rate of annual increase, I'd say we are approaching the edge of the cliff.

LawsofPhysics's picture

Only if you really think those derivative contracts will be honored.  How is that working out for those suckers that bought insurance on Greek Debt again?  The can kicking will end when everyone stops participating and not before.  The end of the current financial system will be completely unforeseen and perhaps never even acknowledged.  Trying to predict any of this is like trying to predict human stupidity.  Either way, do you have physical assets of real value, tradable skills or great employees that do, and like minded neighbors?  You fucking better.

American34's picture

Bingo! You got it buddy! You dang well better be able to depend on those you know and are close too, friends, NEIGHBORES, and immediate employees because these people are your best assets. For all of you in big cities with 10,000 neighbores at your doorstep good luck. The U.S. has almost no sense of community anymore and this will hurt big time. The LawsofPhysics is dead on here. When your not home it is your neighbores who guarantee the safety of your home, not the Police, which number what, 1 out of 5 or ten thousand people.

Oh regional Indian's picture

Spot on. Neighing Bores, never looked at it that way before. What a perspective. Love they neighbour....

But yes, community. It's all about community. But not the way new agers see it.  We are all equal is the biggest lie sold to them. I am NOT equal in any way shape or form to Usain Bolt. Are you?

Annnnnyways, the fire-hose is now officially open it seems. It takes lips of leather to drink from the firehose.

ORI

/the-plan/Updated

Thomas's picture

Hippocratic Oath: Do no goddamned harm. These guys should read it a few times.

TheFourthStooge-ing's picture

Actually, they subscribe to the Hypocritic Oath: ass rape everyone and say it's for their own good.

 

Element's picture

Mars's Central Bank is our gooderest bestest friend ... and their tentacles are so damn cute ... just makes me want to go out and buy some thingamajigs ... like, ... you know, ... for everybody.

Shit is on me!

Beni

el Gallinazo's picture

Equality means equal rights under law.  This is still the case.  We Americans now all have the right to be thrown in a hole forever without charge for speaking our minds. Orwell and Kafka teamed up on this one - too absurd for one genius alone.  

Smiddywesson's picture

Like most of the debt, the derivatives have no chance of being honored.  My point is derivatives helped get us into this predicament, and they are therefore a good way to take the pulse of the patient.  That pulse rate just started racing.  Not a good sign for continued can kicking.  It ain't over yet, but I'd be surprised if it doesn't reach the climax in 2012.

Either way, do you have physical assets of real value, tradable skills or great employees that do, and like minded neighbors?  You fucking better.

Didn't you say that yesterday?  Do you block and paste?  :-)  

My plan is simple.  I stockpile guns, booze and have resigned myself to canibalism.  It's as valid a plan as any other, the food chain is assured, and nobody can smell carion on your breath if you smell like gin.

viahj's picture

but it's those cannibal shakes that give ya away

Alex Kintner's picture

Obama just solved the post apocolapse food problem. Yes we can -- put horse meat in a can.

Horse slaughter plants are legal again in the United States. Restrictions on horse meat processing for human consumption have been lifted. 
http://technorati.com/lifestyle/article/obama-legalizes-horse-slaughter-...

Element's picture

Dude, that is way out of line ... get some godamn toothpaste!

mkkby's picture

We'll see.  Our grandparents have been saying that exact same thing since 1965.

Leopold B. Scotch's picture

...when falling out of a window from a building's 80th floor, it's sheer dipshittery to conclude there never was a problem when passing the 18th floor on the way down based on the simple fact you haven't splattered on the ground yet.

Kina's picture

They reckon the can dig a hole faster than you can fall.

Shocker's picture

Amazing times, Last thng I heard is recession is over, banks are good. All of a sudden a Banks are downgraded and Fed is pumping more money. When does it end?

http://www.dailyjobcuts.com

/

Smiddywesson's picture

When the central banks THAT MATTER have mostly gold on the asset side of their balance sheet

+ cheap gold is no longer available/

or chaos gets out of hand

= They will pull the plug and announce a new monetary system. 

That's when the defaults happen, and that's when the average Joe gets screwed and take a big haircut.  That's when they ramp the price of gold so their assets balance their liabilities.  That's when anyone without physical gold bails out the banks and loses most of their net worth without writing a check to the IRS.

Chief KnocAHoma's picture

Yes but... isn't that somewhat like a book makers balance sheet? Not all of those bets are going in the same direction, so they somewhat offset each other leaving the JUICE for the predator class.

Plus the Fed will save anyone TBTF that has made a stupid bet.

Shocker's picture

Keep digitally printing, because there is no way to actually PRINT this much money

Momauguin Joe's picture

You may be right Chief. The can probably has a few more kicks left in it before it gets kicked over the cliff somewhere. As to Africa and the debt slavery machine, they're working on it (i.e. Bill Gates with his cell phone and lap top racket).

The Limerick King's picture

 

 

The Kleptos can quickly change gears

Their game may keep going for years

Secure family and friends

For their greed never ends

They will rise to the worst of our fears 

Leopold B. Scotch's picture

Either way, gold and silver will increasingly call "Bullshit!!" on them as we progress down this path.

Whatta's picture

The mantra of the PIIGS and bankers...

Only I Need Know, Once I Net Kleptomania...aka OINK OINK.

scatterbrains's picture

 

 

 

Yo the Limerick King is the baddest bitch in the land

 

Somebody please put a mic in his hand

 

with that bling on his head

 

let it never be said

 

that the Limerick king's rhymes are dead.

Robot Traders Mom's picture

@Chief-You are exactly right.

Nobody knows when the shit will hit the fan. In the meantime, if you have available cash, buy precious metals. This is common sense, not investment advice.

The only people that will get burned are those that trade the metals and end up with the hot potato when the game stops.

High Plains Drifter's picture

hmmm, isn't true though that fiat has a final shelf life?    hundred  years max is what i have heard.........2013?

midtowng's picture

Fiat didn't start in 1913. It officially started in 1971. However, it sort of started in 1933.

TheSilverJournal's picture

The USD bubble has been forming for nearly 100 years..ever since the Fed began counterfeiting, or printing notes that were claimed to be backed by gold, when in reality there is not enough gold to back all of the notes. But, in a sense, the Fed stopped counterfeiting in 1971 when Nixon broke the link between the USD and gold. Now the Fed is printing fiat notes, backed by nothing. The USD was somewhat shored up by Paul Volker in the late 1970s and early 1980s by raising rates ahead of inflation. Then the Fed began a relentless campaign of debasing the dollar when rates were kept too low in the 1990's which lead to the .com bubble. Instead of allowing a real recession after the .com bubble popped, Alan Greenspan, the Chairman of the Fed at the time, dropped the Fed funds rate to below 2% in 2002 and ultimately to 1% in 2003.  These ultra low rates brought mortgage rates down which helped drive up the price of real estate, leading to a real estate bubble.   After the bursting of the real estate bubble, Ben Bernanke brought the Fed funds rate to near 0% where they have remained for nearly three years and the USD will soon pay the ultimate price for Bernanke's and Greenspan's mistakes.

TeamDepends's picture

What you are trying to say is that we have been getting bungholed for quite some time, yes?

Greenspan Shrugged's picture

Africa is the most exploited continent in the world.  I think they've got that covered.

Triggernometry's picture

Chief;

If one were safely outside the event horizon, and threw something into a black hole, it would appear to fall forever, although the actual plummet is fast and violent(tidal forces tear the object apart before it even gets close). So whether or not the can is actually kicked indefinitely, money interests will try damn hard to make it appear that way.

mkkby's picture

Uranus blew out thier credit on cheap Neptune-made laser blasters.  But I hear Alpha Centauri will soon bail them out.

Sudden Debt's picture

Typical.... the man have to pay and the woman from Venus are looking the other way....

that pretty much sums up every date I ever had....

 

chumbawamba's picture

Indeed, Mars, the God of War, shall send us unto deliverance.  Of course, "Mars" is "Wars" upside down and inside out.

Mene mene tekel upharsin.

I am Chumbawamba.

chumbawamba's picture

Oh, and look: your icon is a mushroom cloud.  How ironically coincidental.

-Chumblez.

bonderøven-farm ass's picture

Mars, God of War?  Naw.  My local Congressional candidate has a plan, and he's likely to win.....here's a short snippet of our exchange........:

Me: " There are two ways out of our current financial crisis......Print or default. What's your stand?"

Dr. D: " Concerning the national debt, I must disagree with the idea that there are only two choices. We certainly cannot keep printing. It is not now and never has been a cure, not even a panacea, for any nation with substantial debt. As an advocate for Austrian-school economics, I believe printing to have the exact opposite effect. Repercussions are inevitable with printing, geometrically in kind. As for default, the argument has merit but only in theory. It would take a worldwide brain trust of like-minded and correct (Austrian-school) economists bolstered by governments willing to do right things. In reality, these things do not exist.


There is a third option. I believe we must have a balanced budget, and I support a return to 2007 spending levels FOR A START. I will vote for any balanced budget plan, including (but not necessarily limited to) Cut, Cap & Balance or the Penny Plan (Connie Mack/Rand Paul proposal). Rather than defaulting or printing, we can cut spending, reduce the size and cost of federal government, raise federal revenue by reforming the tax code (on an interim basis, with lower corporate and personal rates, and elimination of special interest exemptions/loopholes), pay the interest on the debt, and fund the necessities. This will take determination and many more like-minded Congressmen, as well as a President willing to sign the necessary legislation."

Chief KnocAHoma's picture

Chumbawamba,

You are one of my favorite posters. I admire your style. Simple, short, concise and always with your classic signature. In fact, I rarely immulate anyone, but I often sign off with,

I am The Chief

CPL's picture

 

?u?op ?p?sdn ??? s??? s? ??? ?o po? ??ou s,?? ou

 

 

I was hoping the upside down text would work.

 Let's try Zalgo

C?????r???a???????z????????y?????????? ????t?????????????i?????m??????????????e?????????????!!?!?????????????

midtowng's picture

A global central bank bailout of the banks is BULLISH! Even more bullish than it was yesterday before the global bailout.

Sudden Debt's picture

it's up and down... the only possitive side for me it that the euro is going down the drain...

 

Zero Govt's picture

Benny thinks his dick is bigger than the economy... what a twat

...as QE1, QE Lite and QE2 proved he's packing a maggot (3 flops, let's try 4 in a row)

the hyper-deflation going on in the (credit card) economy will smash Bennys futile dick-waving attempts to reflate. The total failure of Bennys reign of ineptness and impotence is assured 

 

CPL's picture

6 times

 

Emergency Funding in 2008

TARP

QE1

QE Lite

QE 2

Pension readjustment

Now this shit...and that's just the US.  Europe has been a printing mill for three years silently.

 

If there is anyone in the CIA/FBI/NSA/DHS reading this, you've all been had.  Only your groups have the ability to get close to the source of the problem and remove it.  Since most of you will be eating dog food with a stick in a year, you might as well make your last bits of your careers mean something and fight.  We all understand now that this event has now removed the idea of a soft landing, that is now completely off the table.

So if you are human and have people that you love, you might want to start gathering your project staff together as fast as possible to counter the wackadoos that have now destroyed the last semblance of order in the economic universe on our planet.

Either way now, inflation, deflation...it will be a rough ride for everyone here all 7 billion of us.  Be careful, be safe and be brave.