Borrowers Turn Lenders as Banks Tap Firms for Cash!

• The western banking system has suffered a heart attack and the Illuminist central banks are trying desperately to revive it. It does not look like they are successful. All the liquidity injections, ‘free’ zero interest rate monies, have simply placed them on life support. You cannot solve a solvency problem with injections of liquidity. It is like pumping more blood into a heart that has stopped beating!
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• Practically, all major western banks are bankrupt ! Is you money safe in these banks? I don’t think so. All western nations are also bankrupt. So, how are governments going to bailout these banks and their depositors? The Illuminist central banks will create massive gobs of money out of thin air to bail them out. Currency debasement is here and hyper-inflation is next. Got physical gold yet?
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  Borrowers turn lenders as banks tap firms for cash! 
  By Douwe Miedema | Reuters
  LONDON (Reuters) – Blue-chip names like Johnson & Johnson, Pfizerand Peugeotare among firms bailing out Europe’s ailing banks in a reversal of the established roles of clients and lenders. One source with knowledge of the so-called repo deals or short-term secured lending, said the two U.S. pharmaceutical groups and French carmaker were the latest to sign up for them.
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  Europe’s banks are struggling to secure the cash to fund their day-to-day business and have largely stopped lending to each other for fear Europe’s sovereign debt crisis could land any of their peers in trouble.
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  As a result a group of well-known, cash-rich companies with solid cash flows has stepped in the repo market, which provides a form of lending so far almost exclusively in use between banks, and between banks and central banks.
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  One market participant said in one key area of lending companies now accounted for 25 percent of these deals. Repos provide the new financiers with the strict guarantees they need before parting with their cash, answering worries that the crisis has weakened Europe’s banks to the extent that they might not be able to pay the money back.
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  “Companies in the past were … happy to deposit cash on an unsecured basis to a bank for an interest payment,” said Frank Reiss, who oversees some of the repo business at Euroclear, the Brussels-based settlement house owned by a group of banks.
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  “Now following the crisis, we have seen that companies are engaging in repos secured with collateral against the cash they are lending,” said Reiss. Euroclear is the largest administrator of repo trades in Europe.
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  … for more click here!

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