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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: RockyBalboa who wrote (724)	8/11/2007 5:51:23 AM
From: RockyBalboa	Read Replies (1) \| Respond to of 71455

Considering the size of the central banks ongoing refi operations (this is the regular daytoday and short term liquidity provision) - the extraordinary measures applied by ECB are pretty significant: ecb.int ECB allocates about E150B in rolling three-month money and currently E292.5B on a weekly basis (which has continually grown because of the monetary growth in the EU) to provide financing to European Banks. The additions of E90B, then E61B (only a part of the total addition of E83B, the remainder already added to the now larger E292.5B spot/week refinancing) are pretty significant and point to a massive liquidity provision for money which went "missing somewhere else"... As the ECB does not comment on what exactly created the shortfall in liquidity which prompted them to add more than $100B over several days now...one has to ask, what became so illiquid and at what price the underlying assets will be finally liquidated. Stay tuned; the ECB will repeat short term injections over the next weeks. But they will need to either hike the rate or gradually take back the size of the additional funds provided. And the return of the 100B addition which can not stay indefinitely will continue to hang over the markets like a black cloud. ....... a few years back when the credit demand was low the commercial banks had troubles placing money and so the ECB was regularly draining liquidity (at much lower interest rates, of course)