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In virtually all the debates about the eurozone I have been engaged in, someone usually makes the point that it is only when things get bad enough, the politicians finally act – eurobond, debt monetisation, quantitative easing, whatever. I am not so sure. The argument ignores the problem of acute collective action.Last week, the crisis reached a new qualitative stage. With the spectacular flop of the German bond auction and the alarming rise in short-term rates in Spain and Italy, the government bond market across the eurozone has ceased to function. The banking sector, too, is broken. Important parts of the eurozone economy are cut off from credit. The eurozone is now subject to a run by global investors, and a quiet bank run among its citizens.This massive erosion of trust has also destroyed the main plank of the rescue strategy. The European Financial Stability Facility derives its firepower from the guarantees of its shareholders. As the crisis has spread to France, Belgium, the Netherlands and Austria, the EFSF itself is affected by the contagious spread of the disease. Unless something very drastic happens, the eurozone could break up very soon.
http://www.ft.com/cms/s/0/d9a299a8-1760-11e1-b00e-00144feabdc0.htmlQuoteIn virtually all the debates about the eurozone I have been engaged in, someone usually makes the point that it is only when things get bad enough, the politicians finally act – eurobond, debt monetisation, quantitative easing, whatever. I am not so sure. The argument ignores the problem of acute collective action.Last week, the crisis reached a new qualitative stage. With the spectacular flop of the German bond auction and the alarming rise in short-term rates in Spain and Italy, the government bond market across the eurozone has ceased to function. The banking sector, too, is broken. Important parts of the eurozone economy are cut off from credit. The eurozone is now subject to a run by global investors, and a quiet bank run among its citizens.This massive erosion of trust has also destroyed the main plank of the rescue strategy. The European Financial Stability Facility derives its firepower from the guarantees of its shareholders. As the crisis has spread to France, Belgium, the Netherlands and Austria, the EFSF itself is affected by the contagious spread of the disease. Unless something very drastic happens, the eurozone could break up very soon.
The reality, though, is that there are no safe havens anywhere any longer.
While the effort to provide more liquidity may temporarily soothe the symptoms of Europe’s debt crisis and allow financial institutions easier access to funding, it does little to address the underlying roots of overburdened governments that need to be propped up while they drastically cut spending.
The world's major central banks including the ECB, Federal Reserve, Bank of England and the central banks of Canada, Japan and Switzerland agreed to coordinated action to ease the increasing strains on the global financial system. The move is designed to "enhance their capacity to provide liquidity support to the global financial system."“If you stop and think about it, you have to realize what kind of danger the world is in for all the central banks to get together and save Europe,” said Alan Valdes, director of floor operations and VP of trading at DME Securities.Meanwhile, Valdes added that barring overly negative news from the euro zone, the market is poised for a “Santa rally.”
Socialism, the ultimate Ponzi scheme without peer.It's to die for, ain't it?
Quote from: Libertas on October 18, 2011, 01:26:55 PMSocialism, the ultimate Ponzi scheme without peer.It's to die for, ain't it? Funny... I read that real fast and didn't read it right.I read: Socialism, the ultimate Pelosi scheme without peer.
I guess the Fed and Wall St. have forgotten that MF Global was destroyed by gambling on European debt only a month ago . The only crazier thing would be to put a moron in the White House ... Ooops ... We already did that , didn't we ?
where every day could be the developed world's last if not for the ongoing backstops, guarantees and bailouts of the central banking regime.