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Deja whew! European banks don’t look quite so troubled this morning

posted on June 30, 2010 at 9:45 am
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The European Central Bank taketh away and the European Central Bank giveth.

Yesterday, June 29, worries that the European Central Bank’s decision to end a $543 billion one-year special liquidity program would send European banks into a new crisis started a global stock market selloff. (For more background see my post http://jubakpicks.com/2010/06/29/the-european-central-bank-seems-determined-to-make-the-euro-crisis-worse/ )

Today, news that European banks asked the European Central Bank for just $162 billion in three-month loans has fueled an early rally in European stocks and the euro.

Analysts had projected that banks would need to draw down as much as $360 billion from the central bank.

 Today’s offering by the European Central Bank was seen as a kind of preview of the bank stress tests that European governments will report in mid-July. If banks had drawn down something like the $360 billion high-end estimates in new three-month money, markets would have taken that as a sign that banks are still having an extremely tough time raising money in the financial markets.

 So today’s relatively smaller $162 billion draw by banks on the central bank is being seen as a sign that some banks at least are able to tap the financial markets for the cash they need.

 European banks need to refinance that $543 billion under the European Central Bank’s expiring 12-month liquidity program tomorrow.

 This morning the euro was up 0.6% against the U.S. dollar to $1.2266 as of 8:45 ET in New York.

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  • yx on 30 June 2010

    How much can we trust ECB?

  • georic on 30 June 2010

    Jim, in your title, do you mean “déjà vu”, the French for once again or same old story? you seem to be a well traveled man, one more reason for me to subscribe in due time.

  • Purewater on 30 June 2010

    You really think Jim doesn’t know what deja vu means?

  • BRC on 30 June 2010

    Georic — He’s making what is known as a “pun.” It is a bit of word-play.

  • georic on 30 June 2010

    yx, I think that M. Trichet is as trustworthy as M. Bernanke: both mean well but they are not beyond manipulating the figures for our own good as they see it. Same thing applies with the stress tests which I tend to consider as pure bull sh.. or should we say bear sh..

  • georic on 30 June 2010

    BRC, touché.

  • DJBarber on 30 June 2010

    georic – In your response did you mean “touche’”
    meaning “to commend someone on a clever response to an argument” ?

  • chemace on 1 July 2010

    DJ: LMAO

  • B Grant on 1 July 2010

    DJ – well played, I needed a good chuckle after this week

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