The brainchild of Mario Draghi, president of the ECB, the scheme ended up doling out 489 billion euros to over 500 banks. The so called "auction" was billed as a way of averting the entire collapse of the European banking system.
Even more shocking than the actual amount of money given out was the terms under which it was given. For the first time ever the ECB agreed to give three-year loans (in the past it has only been one-year) and did so at a knock-down interest rate of one percent, tantamount effectively to free money.
The next debt auction is now due on 29 February and the banks are expected to demand more than double what they received in December. One senior banker at Goldman Sachs summed up the mood, "They could do another one trillion euros easily in February. It could be way more than that if things get worse in the markets."
The hunger shown by banks for ever greater cash injections suggests that the plan of the ECB president, or "Super Mario" as some have dubbed him, may not be so super after all.
It is worth saying two things about the ECB's cash lifeline. Firstly the amount of money borrowed reflects the severe vulnerability of much of the European banking system. Many were expected to repay bonds in the first quarter of 2012 and so the emergency fund has temporarily averted a looming crisis. European banks have also stopped lending to each other, precisely the sort of problem that preceded the collapse of Lehman Brothers in 2008.
But any hopes that the ECB's loans would work themselves through to loans to businesses or into propping up government debt in the so-called PIGS (Portugal, Italy, Spain and Greece) look forlorn.
Instead the banks are hoarding the money in order to restore the health of their balance sheets. Even more banks are now stashing their money with the ECB, rather than lending to one another. Inter-bank lending dropped to a 10-month low in January.
Meanwhile the ongoing attempts to prevent a major default in Greece face a key deadline on 20 March, when a bond worth 14.4 billion euros is due to be repaid. If no bail-out has been arranged by then it is almost certain that Greece would become the first developed country to default in nearly 60 years. Such a crisis would send shockwaves through Europe.
Already fears that investors in government bonds elsewhere in the eurozone will face losses (which forms part of the plan for restructuring Greece's debt) has sent the cost of borrowing for the Portuguese government to its highest level since they joined the European Union. Where Greece treads, Portugal may follow.
All of this occurs against a background of gathering recession in Europe. The IMF now predicts a 0.5 percent fall in GDP across the eurozone in 2012, with Italy and Spain set be hardest hit. The relentless drive for austerity can only serve to exacerbate this trend.
Super Mario's generous gifts to the banks may prevent a Lehman-style collapse, at least for now, but will do little to dig Europe out of a protracted recession. The fight against austerity will remain a central task for socialists across Europe in 2012.