ECB Lends Record 442 Billion Euros
godoftrading
June 24 (Bloomberg) -- The European Central Bank said it will lend banks
442 billion euros ($621 billion) for 12 months, the most it has ever
allotted in an auction, as it steps up efforts to unblock credit
markets in the 16-nation euro region.
The Frankfurt-based ECB filled all bids in its first offer of 12-month
loans to banks at the current benchmark interest rate of 1 percent. The
1,121 banks that participated receive the funds tomorrow. The euro
interbank offered rate, or Euribor, for 12-month loans fell to 1.57
percent today, a record low.
“It’s even more than our most optimistic scenario would
have suggested,” said Christoph Rieger, a fixed income strategist
at Commerzbank AG in Frankfurt. “There is so much liquidity around
that it will push money-market rates to new record lows.”
The ECB, battling Europe’s worst recession since World War II, is
concentrating its efforts on lubricating the banking system, which
accounts for about three quarters of company financing in the region.
The central bank has cut interest rates to the lowest on record and
will next month start buying 60 billion euros of covered bonds to help
free up credit.
Today’s allotment is “broadly equivalent to one third of
all sovereign issuance in the euro zone this year,” said Erik
Nielsen, chief European economist at Goldman Sachs Group Inc. in
London. “It’s a big number, providing the intended monetary
easing by stealth. I suspect that the ECB is very pleased.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aZhZvQc0E_Eg
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godoftrading
vjp...@at.biostrategist.dot.dot.com
one had, why shouldn't investors buy these assets up when the market
recovers? One the other, why should they? True, RFC/RTC and Pharoah's
Joseph's grain stores all made money for government patient capital. But it
is a monumental task and there are plenty of political interests on both
sides eager to abuse it. Go read Walter Bagehot's Lombard Street (found
online) and you will be surprised how much we knew a century and a half ago.
The big issue isn't knowing, it is doing. That's where right brain
politicians mess up the fine work of left brain economists.
- = -
Vasos Panagiotopoulos, Columbia'81+, Reagan, Mozart, Pindus, BioStrategist
http://www.facebook.com/vasjpan2
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