I am in the camp that believes the ECB panicked today. At least I hope they did and we really didn’t need them to do this. Their decision to step in out of nowhere to be a lender of last resort was extreme. “Lender of Last Resort”…hmmmm…think about that….”LAST RESORT”…”LAST RESORT.” Telling people they will provide unlimited cash may sound supportive but it scares the hell out of me.

But talk is talk and action is action. So evaluating the action you see that they went all out by providing 94.8 billion euros ($130.2 billion) of liquidity to the system. You may have already heard this perspective, but that amount is quite a bit more than what they did (69.3 billion euros) the day after 9-11 rocked the world’s financial markets. And you might want to think through the fact that the 94.8 billion euros they lent today was not taken up solely by BNP. They may have been the only bank to publicly disclose their problems but the offer was taken up in various amounts by 49 unnamed banks. Assuming that 1 of the 49 was BNP, that leaves 48 banks that either have a problem with credit quality or maybe they just wanted to borrow money at the bargain rate of 4.0%. We may never know which one it is. However, it’s worth thinking about what this means for the American Contagion.