Siemens shelters up to €6bn at ECB

Financial Times ^ | Published: September 19 2011 20:42 | Last updated: September 19 2011 23:15 | Daniel Schäfer in London and Chris Bryant and Ralph Atkins in Frankfurt

[cc2k]

Siemens withdrew more than half-a-billion euros in cash deposits from a large French bank two weeks ago and transferred it to the European Central Bank, in a sign of how companies are seeking havens amid Europe’s sovereign debt crisis.

The German industrial group withdrew the money partly because of concerns about the future financial health of the bank and partly to benefit from higher interest rates paid by the ECB, a person with direct knowledge of the matter told the Financial Times.

In total, Siemens has parked between €4bn ($5.4bn) and €6bn at the ECB’s facilities, mostly through one-week deposits, this person said. Only a handful of large companies have the banking licences that allow them to deposit cash directly with the ECB.

[cc2k]

This is a day old story about something that happened two weeks ago.

Siemens started their own bank to have access to the ECB. They've moved some of their own money out of commercial banks and directly to the ECB.

I found this after reading a blog post here on FR about this, The Corporate Bank Run Has Started: Siemens Pulls €500 Million From A French Bank. Clicking through to the source blog on that, I found the link to this story.

Things in Europe are bad. Perhaps worse than we've been told.

[Kartographer]

"Things in Europe are bad. Perhaps worse than we've been told.

Clearly we haven't been told just how bad it is, and yet some can't seem the grasp the significance of this story and your post.

[Ghost of Philip Marlowe]

This is big, folks.

French banks are at very serious risk of imploding because of their exposure to Greek debt, and Greece will without doubt default eventually.

This is also very important because what it indicates is that the central banks, which had operated largely behind-the-scenes as primary lenders are more and more being viewed as “the” banking system for all banking needs...a very dangerous development toward globalized economics and finances.

Plan accordingly.

[nkycincinnatikid]

Why wouldn’t they repatriate to Frankfurt in todays climate?

[driftdiver]

So what will the impact on the US banks be? They probably have significant exposure.

If France goes, who else goes?

[driftdiver]

How the heck do you plan for this?

[proxy_user]

Can’t the ECB just loan it back to the French bank they took it out of?

[cc2k]

nkycincinnatikid wrote:

Why wouldn’t they repatriate to Frankfurt in todays climate?

Because any bank the go to in Frankfurt might not have the strong backing of the United States Federal Reserve.

driftdiver wrote:

So what will the impact on the US banks be? They probably have significant exposure.

US exposure increased last week. Check the link above about the Fed stepping in to back the European Central Bank with additional US dollars.

Helicopter Ben has been loading up heavy long range transports bound for Europe instead of short hop choppers lately.

The Fed and the Treasury are acting out of fear. We could see Euro-TARP soon, both from Europeans, with heavy participation from the good ole USA.

[haircutter]

Isn't Siemens one of the largest employers in the world?

any one know??? I though I heard that some where.

[Ghost of Philip Marlowe]

This would actually strengthen the US dollar and may encourage a lot of wealthy Europeans to invest in US dollar instruments (T-bills and T-notes), because this is another ringing of the death knell of the Euro. Eyes should actually be peeled on Germany. They are the only nation over there that has any type of soundness. They have an election on the horizon and the German people are being very vocal that they are sick and tired of seeing their savings and prosperity flushed down the toilet of the PIIGS. I wouldn’t doubt if Germany bails on the EU and returns to the DM. I also wouldn’t doubt (in the long-run) if the PIIGS cause so much trouble it eventually leads to another European war. Nothing like WWI and WWII, of course, but think of the Greek austerity protests being carried on in Paris and Berlin...that sort of thing, which is possible now that the EU allows such easy international travel.

The central banks are intertwined, however, so the Federal Reserve will probably shift from funds through that “swapping grounds” they implemented a couple of months ago essentially to provide capital for those French banks.

You prepare by getting out of the equities markets (if you are in the equities markets), transferring the 401K to something like Fidelity Cash Reserves, or taking the tax and penalty hit (be careful with that, it adds up) to have cash and to spend that cash on the necessities and to purchase PMs that will retain the purchasing power of the amount of cash at the time of purchasing the PMs.

If you live within one tankful of gas from a population center (city), you should also have a bug-out plan and the means of implementing.

[RayChuang88]

Despite the public actions of some large banks here in the USA supposedly not wanting large cash deposits, I would not be surprised we see a HUGE movement of money to sit in American-based banks and investment companies like JPMorgan Chase, Goldman Sachs, and Morgan Stanley and could even prop up Citicorp and Bank of America as panicked Europeans dump their money here for safekeeping.

And sorry, I don't think the Big Four Chinese banks or the People's Bank of China (China's central bank) will come in as white knights to save Europe--why invest in a potential financial sinkhole? They'll show up after the fiasco plays out and snap up European banks (or the remains of them!) for a song....

[mamelukesabre]

did uncle sam just buy the EU lock stock and barrel? or at least make a large down payment?

[Ghost of Philip Marlowe]

The ChiComs will “contribute” no more than is necessary to protect their investments...as they always do. They’re on the plane, too, so they don’t want it to do a nosedive. They want to land it as softly in the treetops as possible and walk away.

[WOSG]

“They probably have significant exposure.”

Not directly.

[Jedediah]

What could it be that is happening ,

To the ones that think they are having ,

All that they need or desire to do ,

Could all these Asherah poles fall on you ,

The scroll is here open to view ,

But what if your spirit is off and askew ?!

The pride of your heart is about to unfold ,

Releasing the new so beware of the old ,

For the old wineskin will not hold any more ,

The silver and gold of greed over the poor ,

Now only the true and humble shall survive ,

Charity is on what they thrive !

So awaken you hearts of vanity ,

your kingdom has been measured and about to come to Me ,

The riches of the wicked gone in just a day ,

Oh the woes and mourning as they are taken away ,

But to the ones that do my will,

They shall not lack for their cup I shall fill,

And to these obedient and true ,

My kingdom comes even now for you !

For you are the chosen and few ,

Overcome so now your inheritance is due ,

So watch now as I fulfill,

Every jot and tittle for these are the arrows in My Quill,

The true and faithful onto Me ,

For truly I AM their King and Majesty !

Isaiah 58:6-20
6[Rather] is not this the fast that I have chosen: to loose the bonds of wickedness, to undo the bands of the yoke, to let the oppressed go free, and that you break every [enslaving] yoke?

7Is it not to divide your bread with the hungry and bring the homeless poor into your house—when you see the naked, that you cover him, and that you hide not yourself from [the needs of] your own flesh and blood?

8Then shall your light break forth like the morning, and your healing (your restoration and the power of a new life) shall spring forth speedily; your righteousness (your rightness, your justice, and your right relationship with God) shall go before you [conducting you to peace and prosperity], and the glory of the Lord shall be your rear guard.

9Then you shall call, and the Lord will answer; you shall cry, and He will say, Here I am. If you take away from your midst yokes of oppression [wherever you find them], the finger pointed in scorn [toward the oppressed or the godly], and every form of false, harsh, unjust, and wicked speaking,

10And if you pour out that with which you sustain your own life for the hungry and satisfy the need of the afflicted, then shall your light rise in darkness, and your obscurity and gloom become like the noonday.

11And the Lord shall guide you continually and satisfy you in drought and in dry places and make strong your bones. And you shall be like a watered garden and like a spring of water whose waters fail not.

12And your ancient ruins shall be rebuilt; you shall raise up the foundations of [buildings that have laid waste for] many generations; and you shall be called Repairer of the Breach, Restorer of Streets to Dwell In.

13If you turn away your foot from [traveling unduly on] the Sabbath, from doing your own pleasure on My holy day, and call the Sabbath a [spiritual] delight, the holy day of the Lord honorable, and honor Him and it, not going your own way or seeking or finding your own pleasure or speaking with your own [idle] words,

14Then will you delight yourself in the Lord, and I will make you to ride on the high places of the earth, and I will feed you with the heritage [promised for you] of Jacob your father; for the mouth of the Lord has spoken it.

[Euroconservative]

“They have an election on the horizon and the German people are being very vocal that they are sick and tired of seeing their savings and prosperity flushed down the toilet of the PIIGS”

At least one of the “PIIGS” has never got a single cent from Germany: Italy, who is the third EU net payer. Each italian pays net 780 euros to Brussels (each german pays 1200 euros). The collapse of Italy would not only mean the end of the Euro but of the entire European Union.

[RayChuang88]

They’re on the plane, too, so they don’t want it to do a nosedive. They want to land it as softly in the treetops as possible and walk away.

Only partially true, as we note that the majority of China's foreign investments are in Africa, Australia, and the Western Hemisphere. Indeed, China is buying up a HUGE amount of mineral ores in western Australia, which has made cities like Perth fabulously rich.

In short, today's generation of economists working for the Chinese government are often not educated in China, but in universities in the USA and England. As such, they're not as interested in command-style economies, especially since they lived through that experience under Mao Zedong and saw its horrible results!

[RayChuang88]

I think in the end, what we'll see is that the Eurozone will write off both Greece and Portugal in a planned fashion and concentrate on saving Spain and Italy. Once cleaned up, Spain and Italy--because of their potential strong export economies from both agriculture and industrial goods--will become viable members of the Eurozone again.

Why this scenario? The problem with both Greece and Portugal is that they don't have enough productive output to produce their way out of the current financial issues plaguing both countries. A planned write-off will actually provide the stability necessary to concentrate on saving Spain and Italy in the longer run.

[Ghost of Philip Marlowe]

More than “partly” true.

China’s economy is in a bad bubble that will burst eventually. They’ve made many bad choices, chief among them being destroying their agricultural base to bring in workers “slaves” to the manufacturing centers, which are beginning to deflate.

Yes, China is buying up a lot of commodities and natural resources. It is fairly evident they are preparing for war.

But financially, they are very heavily invested in currencies around the world, especially the USD and the Euro. If those currencies collapse, those nations will not be able to purchase Chinese goods (China has been manipulating their currency heavily to ensure that the Yuan is weaker than our currencies so that they can export to us), and China’s economy will implode.

That is why they have a vested interest in ensuring that the USD and the Euro do no collapse. They want to win that currency war eventually, but they want to win it according to their timing.

[RayChuang88]

But preparing for war with whom?

Taiwan? They don't need Taiwan's resources or technical know-how anymore. Japan, South Korea and the United States? They'll be crazy to do that given the huge trade already done with all three countries. Russia? We're forgetting those mobile ICBM's Russia normally aims at the USA could easily be re-targeted for China--and Russia has a fleet of 50 Tu-95MS bombers carrying 2,500 km range cruise missiles that could target Chinese cities and industrial sites.

The most likely opponent is India, not only because India is growing in power as a military and industrial power, but because China shares disputed borders with parts of India. Is it small wonder why India developed its own nuclear weapons and ballistic missile systems as a deterrent against possible Chinese aggression?