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Capital Flight Proves Confidence in European Interbank System has Collapsed !

Duration U.S. Japan Germany UK
3-Month -.01 0.10 0.97 0.51
6-Month 0.02 0.11 0.56 0.59
12-Month 0.08 0.12 0.59 0.53
2-Year 0.19 0.14 063 0.59
3-Year 0.32 0.17 0.67 0.75
5-Year 0.93 0.34 1.20 1.36
7-Year 1.52 0.59 1.63 1.84
10-Year 2.18 1.04 2.14 2.49
30-Year 3.55 2.01 2.98 3.75
  • The European banking system is in severe distress! This coming crisis will be far worse than the Lehman Brother collapse of 2008! Its effects will be felt around the world as dominoes keep falling throughout the entire global banking system! You cannot convince me that everything is A-OK. Those of us who understand what is really going on are getting out of harm’s way. Got physical gold yet? Or are you still hanging onto pieces of CONfidence Job, fiat currencies, electronic fiat digits? The global currency crisis is coming! (emphasis mine)

    Capital Flight Proves Confidence in European Interbank System has Collapsed
    by Mish Shedlock,
    Capital flight from European banks has now reached such a state that for one undisclosed bank needed emergency funding last week for a mere $5 million. Previously, the ECB stepped in to provide $500 million in emergency liquidity measures to non-disclosed banks. As money flees Europe, it lands in US banks that do not know what to do with it. Capital flight has led to negative interest rates in the US.

    Swelling US Deposits as Money Flees Europe
    For a look at European Bank funding needs please see 8 Trillion Euros in Borrow-Short Lend-Long Madness at European Banks; Circuit-Breaker Silliness; Dash for Cash Sends Short-Term Rates Negative Again

    “Lehman-Like” Credit Crunch Hits EU
    For discussion of the European credit crunch and $500 million in emergency liquidity measures to undisclosed banks, please see “Lehman-Like” Credit Crunch Hits EU; ECB Will Not Disclose Affected Banks; Euro-Style Anxiety Spreads to U.S.

    $5 Million in Emergency Funding
    $5 million is a trivial amount. That a bank would need it is not. Jean-Pierre Chevallier writing on Business économiste monétariste behavioriste discusses the setup in his latest post ECB: no more bets! More…

    The situation is out of control in the euro zone, as I have been writing it for a while… The interbank market does not work because euro-zone banks managers have lost confidence in other banks. So they keep their cash in US$ rather than lending it to other banks that need it as they would in normal times: ECB had loaned $5 million to a bank on August, 25.

    ECB had previously loaned $500 million (USD) on August 17. This caused a flash-crash in U.S. markets. The problem is serious.

    Chevallier notes that the paltry amount of money involved “shows that the interbank system is completely blocked”.

    Trust in European banks is shot, and by hiding the banks needing emergency liquidity funding, distrust spreads to all banks in the system. Then again, why shouldn’t distrust spread?

    The entire global financial system is bankrupt. Loans have been made that cannot and will not be paid back.


August 29, 2011 - Posted by | Economics | , , , , , , , ,

1 Comment

  1. […] are already starting to goto the ECB for money. This tells you we are close to a meltdown! See: Capital Flight Proves Confidence in European Interbank System has Collapsed ! […]

    Pingback by The Next Financial Panic Banking Sector Crash Could Start Tomorrow! « Socio-Economics History Blog | August 29, 2011

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