ECB lends banks $639 billion over 3 years

AP by way of Drudge ^ | 12/21/11 | By DAVID McHUGH

[Track9]

FRANKFURT, Germany (AP) — The European Central Bank loaned a massive euro489 billion ($639 billion) to hundreds of banks for an exceptionally long period of three years to shore up a financial system that is under pressure from the eurozone's government debt crisis.

It was the biggest ECB infusion of credit into the banking system in the 13-year history of the shared euro currency.

Wednesday's loans to 523 banks surpassed the euro442 billion ($578 billion) in one-year loans from June, 2009, when the financial system was reeling from the collapse of U.S. investment bank Lehman Brothers.

The ECB is trying to make sure that banks have enough ready cash so they can keep on lending to businesses. Otherwise, a credit crunch could choke off growth and spread the debt crisis to the wider economy through the banks.

[Track9]

The ECB is trying to make sure that banks have enough ready cash so they can keep on lending to businesses. Otherwise, a credit crunch could choke off growth and spread the debt crisis to the wider economy through the banks.

BS

[An.American.Expatriate]

IOW, the banks needed a total of over $1 trillion in the last two years to remain solvent ... I feel confident!

[Track9]

"The bad news is, high demand for the loans creates worries that banks are urgently in need of funds to boost liquidity ."

It's not to loan to businesses, who are not borrowing, it's to meet bank stability requirements.

[hkusp40]

a few observations: 1. this was a failed money laundering scheme by the ECB to loan cheap money to banks with the expectation that the banks would turn and purchase European Debt. 2. the cheap money will be used for nothing more than "carry-trades" by the banks. 3. the ECB has succeeded in injecting more toxic currency into global commerce. The Euro crisis is not a banking crisis. it is a political crisis and the Currency needs to be fixed ASAP.

[Track9]

Exactly. And it has nothing to do with new lending pressure like the article states. It's all the bad debt these banks have. Like here, people are walking away from all kinds of obligations, refusing to throw good money after bad and instead will be taking their investable money somewhere else.

It's interesting to note that in parts of Florida, housing prices are going up.

[Track9]

I see you are exactly right. That helps. Thank you.

Would you add a little more to how the next six months of this will effect the US dollar..?

[An.American.Expatriate]

It's not so much defaults here - instead it is the fact that the banks are looking much closer at the "risk" of lending to each other and are simply not doing it. Further, they are looking much closer at the borrowers intent - want to finance a machine? Fine. Want to "invest"? That is another story. Most borrowers here are not used to such distinctions and complain that credit has become "tight". IOW, those who used credit to leverage a position are complaining and the ECB is encourageing the Banks to play the game just a bit longer ...

[Track9]

Yes, that seems accurate.

[KT22]

EuroFlation! Fifteen percent this time next year. Keep going socialist.

[hkusp40]

The USD will be further weakened by Fed action and congressional spending.

The USD should be rocketing in an otherwise mediocre environement.

How come the Euro and the USD are not 1 to 1?

Because the USD is a POS.

If Switzerland reduces the EUR Peg, that yanks more support from the Euro.

Europe is now split between factions that put the common currency before liberty and those that have correctly identified that their governments have signed away their rights for fancy paper.

I give this comedy another year before Sarkozy is fed to the dogs and Merkel walks away as the Bismark of the 21st century.

Estonia almost collapsed last week. Bank runs in Lithuania.

these might be small peripherals, but if the EU or the Eurozone inravels, we’re gonna get a dose of unpleasant as well.

[Varsity Flight]

OIL= UP

Unemployment= UP

(more govt. “jobs” = oil WAY up)

[Track9]

Don’t you think that private European money will be searching for safer shores and possibly come here in what could be a positive feedback loop of rising stock market and level or falling gold..? Obviously I’m making suppositions so I can test my thinking.

[Track9]

(more govt. “jobs” = oil WAY up)

That's for sure. It's called hyper inflation.

[Track9]

Another thought. Money will want to come out of the EU before it looses its value relative to the dollar. And if they are foreseeing going back to their respective currencies, wont each take time before they’re worth anything on the open market. So the pressure will be to run from holding EU assets.

[hkusp40]

Yeah - everyone is trying to divest from EU debt, but a lot of it mirrors the Sub Prime crisis.

It’s deeply wound into the fabric of the glabal economy.

The Euro itself is a problem, but where it has trading value, this game of chicken will continue until someone falls off the cliff.

THe USD is enjoying a bit of strength people leaving the EUro, but as I said, our FRB and POTUS and CONGRESS are doing things that don’t make large institutions want to pop the cork.

we are caught in a rip-tide market... were are getting tossed around while trying to stay afloat and parallel.

If the Eurozone collapses or systemic default occurs, we’re fooked!

I can’t imagine what a Continent in Default would look like (perhaps the collapse of Rome?)

[Track9]

It’s a strange world when the market are no longer driven by market forces. But in a way, I think they are potentially more predictable.