A follow up to an earlier post: The Financial Times reports this morning that the ECB last week demanded €17bn in “margin calls” from banks that borrowed from it. The margin calls reflect the fact that collateral posted by banks borrowing from the ECB has declined in value. To maintain the value of the collateral pledged to the ECB, banks must either provide more collateral, or reduce their borrowings from the ECB. Although the ECB did not release details, the FT speculates that the margin calls reflect Standard and Poor’s decision to downgrade Greek debt to “selective default” status. Meanwhile, Reuters reported yesterday that a collapse in household spending, exports and manufacturing sucked the life out of the euro zone's economy in the final months of 2011, showing the scope of the downturn that looks set to become a fully fledged recession.