Posted on 12/21/2011 9:01:30 PM PST by bruinbirdman
Banks gorged on €489.19bn of cheap loans offered by the European Central Bank (ECB) - but the gargantuan refinancing effort still failed to decisively address the raging debt crisis.
A total of 523 banks scrambled to take up the ECB’s offer to exchange illiquid assets for cut-price funding in the first of two three-year refinancing operations. The record half-trillion euro take-up – which was far greater than the market had expected – initially triggered a “sugar rush” of euphoria as the move was hailed as a decisive “game changer”. But stock markets fell as economists and financiers recognised that while the imminent danger of another credit crunch had been averted, the threat of sovereign defaults had not.
Nick Matthews, at Royal Bank of Scotland, said: “While the action is very important to help stabilise the situation and reduce the funding risk for the banks, it is unlikely to bring about a turning point in this crisis as the problems are much greater than those in the banking sector and has other political and economic dimensions.”
Chris Wheeler, bank analyst at Mediobanca, said: “It’s helpful. It’s more than a sticking plaster, although it’s by no means the solution longer term.”
Aside from the lending frenzy, fresh data reinforced fears of Europe’s rapidly deteriorating economies. Italian GDP contracted 0.2pc in the third quarter – a drastic reversal of the 0.3pc growth of the previous quarter. The figures suggest that, taken with Italy’s tough new austerity measures, the country may be pushed into its fifth recession since 2001. Consumer confidence across eurozone has fallen sharply in December. The European Commission said its monthly sentiment survey showed confidence dropped to a reading of -21.2 from -20.4 in November, the sixth straight month of decline.
Meanwhile, the US was warned by Fitch
(Excerpt) Read more at telegraph.co.uk ...
Shell game no workee?...Hmmm
A half trillion dollars in fiat money doesn’t help??
Maybe a few trillion dollars more will. lol.
Let’s solve the debt crisis by making more loans. That makes sense.
Yes, amazing it didn’t calm the fears of those nervous about their debt.
Man, this is how the weaker EU countries got indebted to the ECB in the first place; cheap loans. Then bam, up went the interest rates. They’re falling for it again.
Not much different than Joe Six Pack using one credit card to pay down the balance on other.
Look out!!! She’s gonna blow!!
This pressure pot is going to blow soon. Zero I am sure is working hard to keep it afloat until after the next election.
If he wins, who cares. If he looses, it’s the republicans fault.
That is exactly what is going on.
These loans are coming from ECB to euro banks, most of whom are insolvent and have increased capital reserve requirements. Capital markets are virtually closed to them (because they're broke).
What capital they do have is mostly sovereign (risky) bonds. The ECB is letting these banks use their sovereign bonds as collateral.
These banks went to ECB for loans, using the sovereign bonds as collateral, and are using that as capital reserves. They are not turning around and buying Greek, Spanish, Italian, etc. bonds for 5% - 7%.
So, ECB is providing the means for insolvent banks to recapitalize.
Now ECB is insolvent.
yitbos
“The figures suggest that, taken with Italy’s tough new austerity measures, the country may be pushed into its fifth recession since 2001.”
Did Italy ever come out of a recession? If Italy has had 4 recessions, how many recessions does it take to make 1 depression?
The silliness along with the pain continues as politics collides with finance. Banksters don’t care who carries the burden of misery as long as they can collect fees and interest on bailouts/loans/infusions/bonds etc.
Once paper begins being shunned then watch for silver to outperform all means of hoarding. Then you will know the panic is in full swing. Maybe after a couple more years of pain.
Kinda reminds one of Japans last 20 years. They celebrate a quarter of .2% growth.
yitbos
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