tag:blogger.com,1999:blog-5235419263414453422.post4534355046870279491..comments2024-02-23T01:30:06.101-08:00Comments on Early Warning: Latest European IndicatorsStuart Stanifordhttp://www.blogger.com/profile/07182839827506265860noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-5235419263414453422.post-2294413529105095312011-09-05T16:44:52.238-07:002011-09-05T16:44:52.238-07:00rebecca wilder thinks Kash made a mistake in his a...rebecca wilder thinks Kash made a mistake in his analysis: <br /><br />Regarding foreign banking offices in the US - the transatlantic flow is US to Europe, NOT Europe to US...<br /><br />http://www.newsneconomics.com/2011/09/regarding-foreign-banking-offices-in-us.htmlrjshttps://www.blogger.com/profile/15681812432224138582noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-56593488409896125242011-09-05T13:14:00.289-07:002011-09-05T13:14:00.289-07:00Worth noting that cash deposits in the US banks ar...Worth noting that cash deposits in the US banks are liabilities for the banks. Some have already expressed concern about the volume of deposits recently (although those reports didn't indicate the source of the deposits), and the potential need to raise additional capital to offset the increase in liabilities.Michael Cainhttps://www.blogger.com/profile/01472223216496790376noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-41619012822242255882011-09-05T11:29:11.321-07:002011-09-05T11:29:11.321-07:00Stuart, what do you mean by "responding"...Stuart, what do you mean by "responding"? You mean more ECB intervention... or?<br /><br />AlexAlexander Achttps://www.blogger.com/profile/16845172528191878930noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-80112391443021834742011-09-05T07:36:52.819-07:002011-09-05T07:36:52.819-07:00Euribor doesn't tell you the story because eur...Euribor doesn't tell you the story because eurozone banks can get any amount of euro-denominated funding they like, from the ECB. They are drowning in euros (have been for 2 years now), there is no demand to borrow it from private counterparties.<br /><br />The issue is with USD-denominated funding. Banks mostly keep their balance sheets silo'ed by currency. They have USD-denominated debt to finance USD-denominated assets. Now the USD bonds have to be rolled over, and the USD assets have not gone any better since 2007 (although book values have bee frozen at the nicest valuations). So <b>some</b> euro banks need USD badly, and others have plenty of USD but won't lend it in Europe, hence the parking in US banks.<br /><br />For the "bad" euro banks, USD funding can only be obtained through the Fed-ECB swap lines (to be watched, but little "real time" official disclosures), or by straight out buying USD (liquidating good EURO assets). This has not started yet, it would make the USD rally much more (there was a bout of this in 2008).<br /><br />So there is a potentially big problem, but concentrated on a few names. The USD libor panel details may give them away.Pierrehttps://www.blogger.com/profile/00728045243466772940noreply@blogger.com