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ECB injects 1/2 of a trillion dollars into European banking industryECB injects 1/2 of a trillion dollars into European banking industry
lil dickie said: "How come no one is talking about this HUGE [url=http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=&xml=/money/2007/12/19/cnbanks319.xml]injection of cash[/url] into Europes banking system?
[quote]
The scale of the ECB injection dwarfs the emergency funding that stunned financial markets at the start of the credit crunch in August. Unlimited sums of money are being provided for two weeks at 4.21pc, some 70 basis points below the three-month Euribor rates that set mortgages in Spain, Ireland and elsewhere.
A syringe filled with money; Huge ECB cash injection dwarfs BoE auction
The cash doses: €350 bn from the ECB
and £10 bn from the Bank of England
"This is a huge sum: the banking system is now awash with short-term funds," said Julian Callow, eurozone economist at Barclays Capital.
It is an admission that the central banks of Europe, Britain, and North America failed to unfreeze the credit markets with a collective promise of $90bn in funding and a blizzard of reassuring words last week. [/quote]
It provides basically "unlimited liquidity"
[quote]
Nouriel Roubini, a professor at New York University, said the ECB and fellow banks were now engaging in "stealth" rate cuts. "Liquidity palliatives and band-aid will not work. This severe liquidity crunch is due to insolvency and widespread lack of trust. The failure of central banks to provide the appropriate diagnosis of the crisis and now their failure to provide enough monetary policy easing to reduce the damage on the real economies is worrisome," he said.
The ECB is constrained by inflation, now running at 3.1pc - the highest since the launch of the euro. Even so, the mood is shifting. Jurgen Stark, the ECB's chief economist and arch-hawk, told Italy's Il Sole yesterday that Europe would not be able to shake off the US slowdown. "I don't believe in the decoupling hypothesis. People who talk about it stress the trade links between the US and the eurozone, but you have to remember that the financial links and the effects of confidence are more important. We will not be immune," he said.[/quote]
Seems to me Europe is in deep doo doo with a move like this."
Heather said: "It sounds like another bailout to me."
AlfredSokol said: "I liked the part about there may be a shadow reason such as:
[quote]
In theory, yesterday's liquidity blitz was a short-term house-keeping measure to keep the markets fluid through Christmas and New Year. The markets remain sceptical, suspecting that the [B]eurozone may be harbouring something[/B] very nasty - possibly in the Spanish banking system.[/quote]
Something has to be wrong!"
newinvestor123 said: "[QUOTE=Heather;60237]It sounds like another bailout to me.[/QUOTE]
It is.
:("
Airelon said: "Hmmm. Jool resurrected this old thread. :(
But this got me to thinking.
When did lil' post this? 12-20-07?
And when did the Societe Generale mess start - that now - it's understood Societe Generale fully understood what was going on. Look at Alfred's post.
Not wanting to sound too much like a conspiracy theorist. And the trillion dollar infusion is so much greater than what the rouge trader took . . . . but one of those things that rises your eyebrows . ."