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Expectations for tomorrow's results of the ECB's first offering of unlimited 3 year loans...

Expectations for tomorrow's results of the ECB's first offering of unlimited 3 year loans (LTRO) are growing exponentially, with some forecasts for the take-up rising as high as €600B. Alongside those expectations are hopes this will be the crisis-ending bazooka as bankers take the near-free money and play the "Corzine trade" by buying sovereign paper. (see also)
Comments (9)
  • kyleg17
    , contributor
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    20 Dec 2011, 10:39 AM Reply Like
  • kyleg17
    , contributor
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    Why would EU banks buy more assets when they are desperately trying to sell them? Someone please tell me! If this is the backdoor QE everyone is waiting for, then I think everyone is jumping the gun on this one.
    20 Dec 2011, 11:36 AM Reply Like
    , contributor
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    yes, it's a form of QE. Instead of having ECB buy bonds, the ECB lends money to banks at 1% for 3 years (unprecedented good terms) and the banks use it to buy the sovreign bnds yileding much higher (they can of course do other things with the mone like pay down their own higher interet debt).


    i don't know whether it will work long term or not. but one thing i find amusing is that not one commentator on CNBC or SA or anywhere saw this coming, it was all doom and gloom, which made sense to me, but at the same time it seemed like everyone was parroting the most obvious responses and I wodnered how much research they had really done into the measures and how much insight was really being conveyed. All the commentators said the only way out of this is for the ECB to buy the bonds and if they are not doing that Europe will burst into flames by year end. I followed the logic, but the responses came so quickly after the measures were announced that i wondered how many commentators actually took the time to research the ramifications. Answer: none.
    20 Dec 2011, 03:17 PM Reply Like
  • nobby73
    , contributor
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    It's not a form of QE, it's merely the ECB trying to fill the void of the collapsing European repo market.
    20 Dec 2011, 04:25 PM Reply Like
  • kyleg17
    , contributor
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    I guess EU banks liquidating their assets was irrelevant and Europe gets another handout. This rally leads us right into a year end Santa rally like everyone expected. I am more optimistic than I was 24 hrs ago.
    20 Dec 2011, 03:54 PM Reply Like
  • davidshelton
    , contributor
    Comments (338) | Send Message
    Yay to leverage!(not printing right? - hurrah for the Germans!). Europe is saved!
    Back to work everyone.....
    20 Dec 2011, 04:28 PM Reply Like
  • kyleg17
    , contributor
    Comments (174) | Send Message
    Analyst expectations are between 50 B - 600 B for this auction. Pretty ridiculous range so don't get your hopes up too soon.
    20 Dec 2011, 05:23 PM Reply Like
  • sloemoe
    , contributor
    Comments (42) | Send Message
    If I were stuck with a balaance sheet of long term European debt I would borrow as much as I could get for it.How I would use it ?If I can get short term bonds that are paying 3% I would ride that until the EU collapsed.Actually I could be party in deciding who gets saved or who gets removed from the EU just by buying those countries bonds who have a better future and offer me a better future.GREED NEVER LEAVES !!
    20 Dec 2011, 09:18 PM Reply Like
    , contributor
    Comments (596) | Send Message
    At least they're trying to do something on a bigger scale than they have done in the past. It just might stave off defaults for the time being. Eventually the money owed by the sovereigns and the banks themselves must be paid back. When I see that happening I'll believe there is a light at the end of the tunnel. I just hope the light bulb won't be burned out by then.
    20 Dec 2011, 11:29 PM Reply Like
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